Facebook’s hotly anticipated initial public offerings might be delayed due some of the company’s recent high dollar purchases, unnamed sources familiar with the matter tell CNBC.
Rumors have been circulating that Facebook management had targeted the IPO for May, with a road show to prepare for the sale starting May 7 and trading to begin May 14. However, now might not be the best time to make the offering.
Because of it’s $1 billion acquisition of Instagram and $550 million purchase of patents from Microsoft, Facebook was forced to release an amended S-1 yesterday to reflect its first quarter financials. It showed that Facebook’s net income (or profit) actually dipped by $28 million from the first quarter of 2011, as VentureBeat reported earlier. CNBC’s sources also indicate that Facebook CEO Mark Zuckerberg has been more focused on running the business (and handling acquisitions) than he has on preparing for the IPO sale.
The SEC is likely to require another S-1 update to explain the recent purchases that goes beyond the short explanation added in the previous S-1 filling, founder and CEO of analyst firm PrivCo‘s Sam Hamadeh told VentureBeat regarding the situation.
“This now risks the IPO bumping up against the Memorial Day 2-week IPO deadzone as well, which would further push it to June if the SEC doesn’t quickly approve the new filing, as it probably won’t,” Hamadeh said. “Regardless of whether Facebook’s recent acquisitions made business sense, the timing of them was foolish, risks delaying the IPO timeline, and caught even Morgan Stanley off guard.”
Facebook declined to comment on the situation.