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Friday, January 07, 2011

Facebook Faces Loss of Its Privacy

Facebook revealed that it is preparing to go public with its financial data sometime in 2012. Facebook expects its investor population to exceed 499 this year, it reportedly states in a private placement document leaked to a number of media outlets from Goldman Sachs, which would compel it to disclose tons of financial information.

Investor interest in Facebook has grown with stepped-up private trading by former employees and early investors on websites such as SharesPost and SecondMarket. On Monday, Goldman Sachs announced it made a US$500 million investment in Facebook, which pegged Facebook's value at $50 billion. Facebook's value just last year was $10 billion. This mammoth increase in value over the past year gives it and its exclusive group of investors the incentive to go into public trading.

The growth in investors and a potential IPO could change the face of Facebook. "It means that Facebook and its investors want to take advantage of the amazing momentum the company has generated," Azita Arvani, principal of the Arvani Group, told the E-Commerce Times.

A Facebook IPO will have an impact on Facebook's freewheeling culture. "What it means, bottom line, is more accountability -- more accountability to its investors, more accountability to its customers and to Wall Street, including the financial analysts," Laura DiDio, principal analyst at ITIC, told the E-Commerce Times.

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