Facebook is reportedly set to freeze secondary market trading next week ahead of its plan to take the company public in May.
The world's biggest social network will temporarily stop the sale of its shares as part of its preparation to table its initial public offering, regulatory filings for which first landed in February this year.
Bloomberg reported the plan to halt the sale of shares on the secondary market yesterday and cited an anonymous tipster familiar with the plan.
It's understood that Facebook wants to get a better grip on its shareholder base ahead of floating the company on Wall Street where it hopes to trade under the "FB" ticker. The move should also help steady the social network's IPO valuation for bankers and investors.
Facebook is hoping to raise $5bn in its road to going public, with the Mark Zuckerberg-run outfit gunning for a record-breaking Silicon Valley price tag of $100bn.
The company amended its S-1 filing with the US Securities and Exchange Commission for the third time on Tuesday, providing an update on its patent dispute with Yahoo! and a little more detail on location settings for mobile users on Facebook.
Earlier this month, Yahoo! filed a lawsuit against Facebook in California claiming that the company infringed patents relating to advertising, social networking, privacy, customisation and messaging for which the ailing Purple Palace is seeking damages, an injunction and a "damage multiplier".
"If an unfavorable outcome were to occur in this litigation, the impact could be material to our business, financial condition, or results of operations," Facebook admitted in its updated filing.
It also explained that a mobile device user's geographic location may be inaccurate - a fact that could upset Facebook's customers.
"[A] mobile-only user may appear to be accessing Facebook from the location of the proxy server that the user connects to rather than from the user’s actual location," it noted.
"If advertisers, developers, or investors do not perceive our user metrics to be accurate representations of our user base, or if we discover material inaccuracies in our user metrics, our reputation may be harmed and advertisers and developers may be less willing to allocate their budgets or resources to Facebook, which could negatively affect our business and financial results." ®