Facebook reportedly preparing to sell its stock on the open market
WASHINGTON (CNN) – Facebook is reported to be filing papers to sell its stock on the open market.
Both the New York Times and CNBC report that paperwork is expected to be turned in to the Securities and Exchange Commission on Wednesday. This means investors may soon be able to own a small slice of the world's largest online social network.
Several reports said Facebook is expected to file documents with regulators for a $5 billion IPO or Initial Public Offering of stock.
"It's when, say I own a hot dog stand and my hot dog stand is getting bigger, and bigger, and bigger and I need new investors to meet up the demand for growing my hot dog stand," said New York Bureau Chief John Abell. "So, I go find an investment banker and I say sell shares to the public cause I would like them to invest in my hotdog stand."
Facebook makes most of its money through advertising because it's a privately held company and has not had to release its financial investments. That means there is no telling exactly how much its stock will be worth on the open market.
"The pre-IPO price for Facebook based on private trading markets is somewhere in the $80 billion to $100 billion range," Christine Romans said. "These are numbers that you just don't see. We're in uncharted territory here."
Facebook will not have to open up about its finances until it actually starts trading. That usually does not happen until months after a company's first IPO filing.
So, will investing in Facebook's initial public offering make you rich? WAVE 3 is working for you, searching for answers. Click here to find out what we uncovered on the web.
Copyright 2012 CNN/WAVE News. All rights reserved.
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