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Tickers in this Article: YHOO, GOOG, BIDU, SINA, AMZN
With the Securities and Exchange Commission (SEC) showing interest in the trading of private company stock for Facebook and other social networking sites, there is more speculation that the company may be pushed into an IPO.

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Facebook on the Move
Mark Zuckerberg, Facebook's CEO who's been visiting China, is not the only one on the move. The social networking site has now passed Yahoo! (Nasdaq:YHOO) as the number three website in the world. According to comScore, Facebook drew 648 million unique visitors while Yahoo had 633 million in November. Google (Nasdaq:GOOG) led the net with 970 million visitors.

As for Zuckerberg's China trip, there are plenty of pros and cons for Facebook entering that internet Xanadu. It's not a given that Facebook will readily plunge into a market where there would be a dragon of potential censorship problems with the Chinese government. Yet it's hard to see Zuckerberg's friendship with CEO Robin Li of Chinese search giant Baidu (Nasdaq:BIDU) and Zuckerberg's tour of online ad company Sina (Nasdaq:SINA) merely as in-person social networking. Our bet would be that Facebook winds up as a China player, dragon notwithstanding. It's too tempting to pass up.

The SEC's Interest
It isn't just watching highlights of Zuckerberg's travels in China that's drawing interest. Facebook's been drawing some distinctly unsocial-type interest from the SEC. With Greencrest Capital and Felix Investments raising "Facebook funds," according to Dealbook's Peter Lattman, and guesses at Facebook's value in a range of $40 to $50 billion or more, the SEC's curiosity has no doubt been piqued. Rules for private companies such as Facebook require that once it has more than 500 shareholders it must register with the SEC and disclose its financial information. Brisk trading in the aftermarket for the private stock has been widely written about and there's an undercurrent of demand for the company to go public, though Zuckerberg is reluctant.

Will Facebook Get Googled?
Google was once in a similar reluctant mode. Its founders, Larry Page and Sergey Brin, saw their company cross the 500 shareholder threshold in 2003 and took the company public a year later. Google's success as a public company since its IPO has been staggering, as it's become the dominant online search company and a tech bellwether. Another well-known successful internet IPO was online retailer Amazon (Nasdaq:AMZN), which made the adjective "skyrocket" come alive when the offering price was raised twice pre-IPO, then the stock shot up 30% on the first day.

Facebook Is Different
Facebook is not in the same position that Google or Amazon were. Facebook, while certainly as hot as a private investment can be, has more questions about its potential valuation. Even trying to figure out its revenues and possible earnings by guessing at intimations from anonymous sources seems a sketchy thing at best. Yet hedge funds, venture capitalists and money managers, by all reasonable accounts, are either in the investment pools that own the private shares or are lining up to do so. (For related reading, see Alternative Ways To Invest In Facebook.)

The Bottom Line
There are questions about the business model, about how the social networking site will monetize its vast popularity going forward - a legitimate concern. A simple ad words or user fee approach may do the trick, but it would be good to know, certainly before buying into an IPO. Facebook already has deep resonance with users. So chances are, Facebook won't vaporize like, say, some obscure internet party site back in the dotcom bubble days of anything-for-an-IPO, but Facebook needs to nail down its business model. As for an IPO, that's a when, not an if.

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