On private companies, trading and valuation: Facebook, Twitter, Zynga, LinkedIn, Groupon

• Might Facebook be forced to go public earlier than Mark Zuckerberg wants? The Facebook CEO regularly downplays IPO talk. In a recent profile in Time, which chose him as person of the year, Zuckerberg sounded less than ready to cede control to investors: “I think the next five years are going to be about building out this social platform,” he said.

But an SEC inquiry into stock trading in private companies such as the social networking king, as well as Twitter, Zynga and LinkedIn, could push rapidly growing Facebook into an IPO sooner rather than later, writes New York Times DealBook’s Peter Lattman. Lattman reports that according to legal experts, the “frenzied” trading has drawn the interest of regulators partly because of a federal law that requires companies with at least 500 investors to register its shares with the SEC and disclose its financial information. Secondary-trading markets allow investors to trade shares in private companies, and investment vehicles that pool investors’ money could be sidestepping the investor-limit rule. The Wall Street Journal reports that another SEC concern is whether the people who are enabling trading in the companies should be registered brokers and dealers.

The activity in the secondary markets has contributed to sky-high valuations for hot companies. Palo Alto-based Facebook’s valuation, according to the DealBook article: $42.37 billion, although other estimates have put it higher. In a recent Mercury News article exploring private companies’ “enterprise values,” a research firm’s study valued Twitter at $2.1 billion, although other recent estimates valued the San Francisco-based microblogging service at $3.7 billion based on its latest round of funding. At $5.51 billion, Zynga, the San Francisco-based maker of online social games, reportedly surpassed video-game maker Electronic Arts in value in October. And the estimated value of Mountain View-based social networking site LinkedIn is $2 billion.

• More valuation: Groupon‘s could climb to as high as $6.4 billion to $7.8 billion, according to a research firm cited by Reuters, after its planned sale of shares worth about $950 million. Earlier this month, the Chicago-based company that has brought sexy back to coupons rejected a $6 billion acquisition offer by Google in what would have been the biggest purchase in the Internet behemoth’s history. The deal also would have boosted Google’s efforts in local markets.

 
 

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