Privately held Facebook in 5-for-1 stock split

SAN FRANCISCO (Reuters) - Facebook, the world’s No. 1 Internet social network, is splitting its stock, as shares in the privately held company have surged roughly seven-fold in the past 15 months.

Facebook CEO Mark Zuckerberg walks through Facebook headquarters prior to unveiling the company's new location services feature called "Places" at a news conference in Palo Alto, California August 18, 2010. REUTERS/Robert Galbraith

A Facebook spokesman told Reuters on Friday that Facebook is enacting a 5-for-1 split of the company’s shares in order to bring the value “back down into the range of other private companies.”

Facebook has no plans for an initial public offering of the company’s shares, said spokesman Jonny Thaw. He noted that Facebook has split its stock twice before, with a 4-for-1 split in October 2007 and another 4-for-1 split in July 2006.

With users at half a billion and counting, Facebook is closely watched by investors hoping to one day buy public shares in the fast-growing company.

A brisk market for Facebook’s private shares has developed in so-called secondary markets, such as Sharespost and SecondMarket.

Recent bids for Facebook stock on Sharespost were at $85 a share and $80 a share, and contracts for Facebook shares at the end of August were made for $72 a share and $75 a share.

In June 2009, Reuters reported that shares of Facebook were being quoted on the secondary market for between $10 and $10.50 a share.

One person closely involved in the trading of private company shares said splitting the stock would allow Facebook to give employees and recruits a larger number of shares, even though the total value of the shares would not change.

“If you were going into Facebook, before they would have been able to say I’m going give you 10,000 restricted stock options, now they can say I’m going to give you 50,000; it sounds better,” said the person, who wished to remain anonymous, adding: “It’s all optics.”

Stock splits are rare for private companies, but not unheard of. Before becoming a public company in 2004, Google Inc made two separate 2-for-1 stock splits in 2003, and other splits in years prior to that, according to regulatory filings.

Earlier this week, Facebook board member Peter Thiel told Reuters the company would probably sell shares to the public at some point, but not before late 2012.

Facebook has become one of the Web’s most popular destinations, and is increasingly challenging established Web giants like Google and Yahoo Inc for advertising dollars, say analysts.

News of the stock split comes on the same day that The “Social Network,” a not-entirely-flattering film about the creation of Facebook from a Harvard dorm room in 2004, opens in theaters across the United States.

Last week, Facebook co-founder Mark Zuckerberg announced that he would sell $100 million in Facebook stock to fund public schools in Newark, New Jersey.

Reporting by Alexei Oreskovic; editing by Gunna Dickson and Gerald E. McCormick