Facebook nears float as it stops secondary trading

FACEBOOK will suspend trading of its shares on the secondary market from next week in a sign the social network is inching closer to its mammoth IPO, expected in May.

The Menlo Park-based company is said to have asked grey market operators to halt trades of Facebook shares to avoid valuation churn while it sets its IPO price.

SharesPost, a company that facilitates trading of unlisted shares, said yesterday it will stop processing trades of Facebook stock at close of play on Friday “to help ensure the company’s orderly transition into the public markets.”

Facebook shares were trading at around $43 on SharesPost last night, valuing the company at just over $100bn.

The social network filed for its IPO on 1 February, less than a week after suspending trades of its stock on the grey market, when SharesPost valued the company at $74.3bn. A week after filing its flotation form with the SEC, Facebook hit a valuation of $123bn on private-stock trader IG Markets.

The eight year old website re-submitted its filing to the SEC yesterday, admitting in an update that the impact of its current patent clash with Yahoo “could be material to our business, financial condition, or results of operations.”

Yahoo brought a legal case against Facebook on 12 March claiming infringement of 10 patents relating to advertising, social networking, privacy, customisation and messaging.

The Zuckerberg-owned website said it will “vigorously defend” itself but has yet to assert any counterclaims as the litigation is still in its early stages.

Facebook, which has 845 average monthly users, generated almost $4bn in revenue last year.

Mark Zuckerberg, who dropped out of Harvard to focus on the website he started in his college bedroom, owns 28.4 per cent of Facebook and is set to rake in billions when his company floats.

But he has faced criticism for the dual-class structure of the stock, which will see the 27 year old control 57 per cent of Facebook.

The social network has yet to disclose which stock exchange it will float on, but has reserved ticker symbol FB on Nasdaq and NYSE.

Morgan Stanley is lead underwriter on the $5bn IPO.