To IPO (NOW!!!) Or Not: Facebook’s $10 Billion Question

Sheryl Sandberg
Sheryl Sandberg contemplates what she could do with $10 billion

[credit provider=”Robert Scoble” url=””]

After watching LinkedIn’s IPO go completely crazy last week, and Zynga rush to move forward with its own next month – Facebook bosses Mark Zuckerberg and Sheryl Sandberg are presumably deciding whether or not they should follow suit.Because it’s quickly approaching 500 shareholders, Facebook has already decided to begin disclosing its financials sometime early next year.

But that doesn’t mean it has to list itself on a public market and IPO.

There’s still a choice.

The question boils down to this: How big of a competitive advantage do Mark and Sheryl think it will be for Facebook to have $10 billion or so in cash available.

Facebook is currently valued at $72 billion on the private markets. People think it will have $2 billion of EBIDTA and $4 billion in 2011. If Facebook went public today (or next month), you can easily imagine an offering at a $100 billion valuation or more (probably more). If Facebook wanted to use the IPO to raise cash, it could easily walk away with $5 billion to $10 billion.

What could Facebook do with $10 billion? How big of a competitive advantage is it to have that kind of money in the bank?

It could buy companies like Skype or Twitter, which it wanted to acquire in recent months and years but failed to.  Or it could build massive server farms. Or it could hire 20,000 salespeople and kill Groupon. Or it could buy its way into the smartphone hardware business.

On the other hand, if Facebook doesn’t think it needs to make huge bets like those, it’s probably in no rush.

If Facebook does IPO, these people will get rich: Meet Facebook’s (Soon-To-Be) Billionaires