Facebook Inc. 8-year-old world's largest social network company which boasts 845 million members globally, nearly half of them mobile users, up 39% from a year earlier filed for an initial public offering that could value the social network between $75 billion and $100 billion, putting the company on track for one of the biggest U.S. stock-market debuts of all time. Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Barclays Plc and Allen & Co. were hired to handle the deal for the Menlo Park, California- based company.
Facebook Inc. was forced to file to go public because it ran up against the limits of the 500-shareholder rule. Private companies with more than $10 million in assets are required to file detailed financials with the Securities and Exchange Commission once they exceed 500 stockholders.
The company hopes to raise as much as $10 billion when it begins selling shares this spring, said people familiar with the matter. Facebook looks more seasoned than many of its Silicon Valley peers had when they announced plans to go public. According to the prospectus it filed with the SEC, Facebook has been profitable for the past three years. Potential buyers got their first look, which showed the company produced a $1 billion profit last year from $3.71 billion in revenues. That's nearly double the $1.97 billion in revenue it registered in 2010. The company derives 85% of those revenues from advertising, with the rest from social gaming and other fees. But the company has annual revenue of only $4.39 per active user.
Facebook's revenue is still driven by online ads. The number of ads delivered on the site grew 42% and the average price per ad grew 18% over 2011 from 2010, according to the filing. Social gaming has become an increasingly important part of Facebook's business. The company generated $557 million in revenue from partners such as Zynga who sell virtual goods last year.
The CEO Mr. Zuckerberg owns around 28% of the company and holds 57% of its voting share power, according to the filing. “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected” he said in a letter to investors included in the company's IPO filing to the Securities and Exchange Commission. "We hope to strengthen how people relate to each other, Even if our mission sounds big, it starts small — with the relationship between two people. Personal relationships are the fundamental unit of our society. Relationships are how we discover new ideas, understand our world and ultimately derive long-term happiness. At Facebook, we build tools to help people connect with the people they want and share what they want and by doing this we are extending people's capacity to build and maintain relationships."
This is a company that has only just begun to scratch the surface of making money off those hundreds of millions of people getting on Facebook every day. Many investors may already have exposure to Facebook even if they haven’t deliberately acquired shares through the secondary market or a private fund. About 50 mutual funds have reported stakes in the company, according to Chicago-based Morningstar Inc. Wealthy investors aren’t clamoring for a piece of Facebook Inc.’s initial public offering because some own the stock through private transactions while others shy away from risky technology deals, according to advisers.
This new form of media -- Social Networking -- will not only redefine the Internet, change human relationships, create a new marketing landscape, and challenge Google, but it will now rescue and alter the economy itself.
Facebook's offering, filed with the Securities and Exchange Commission, also laid out some of the risks to its business in the highly fickle and competitive social-networking arena. The company views Google, Twitter and Microsoft, which has a financial stake in Facebook, as its chief rivals. It warns potential investors that Google, for example, could integrate its Chrome Internet browser, its Android operating system or its search engine into its Google+ social site — a move that could put Facebook at a disadvantage.
Now check out some of the IPO stories of some of the country's biggest tech firms:LinkedIn: 2011
The most anticipated IPO until Facebook, professional networking site LinkedIn went public at $83 May 19, 2011, and shocked the high-tech world by soaring to 122.70 before closing at $93.86. Today, LinkedIn shares trade for a more modest $72. But LinkedIn's debut highlighted the market's feverish intensity for a hot Internet stock. LinkedIn is currently valued at $19.3 billion.
Google: 2004
Google filed for its IPO in April 2004, with Morgan Stanley & Co. Inc. and Credit Suisse First Boston LLC named as underwriters. Shares of Google Inc. jumped 18 percent on their first day of trading after the company went public in August 2004 and have risen more than 500 percent since, Bloomberg data show. As the AP noted this week, the search giant raised $1.2 billion for a market value of $23 billion, the largest debut for a U.S.-based Internet firm. Shares were offered at $85, but opened to $100 and closed at $100.34 after the first day. Google is currently valued at $187.83 billion.
Amazon: 1997
Amazon went public in May 1997 with 3 million shares of common stock for $18 per share. At the time, Amazon was averaging about 50,000 visits to its Web site, up from 2,200 a day in December 1995; last year, comScore said Amazon had 282 million visitors in June, or 20.4 percent of the worldwide Internet population. As the Puget Sound Business Journal noted at the time, analysts were divided over how successful the Amazon IPO might be. Amazon is currently valued at $87.38 billion.
Yahoo: 1996
Yahoo's April 1996 IPO spurred a "trading frenzy," the Los Angeles Times said at the time. The Internet firm's shares were priced at $13, opened at $24.50, and closed at $33. At the time, it was the Nasdaq's second-biggest first-day gain, the Times said. The IPO apparently attracted many regular investors looking to cash in on the dot-com boom. Yahoo is currently valued at $19.3 billion.
Microsoft: 1986
Microsoft went public in March 1986 at $21 per share, closing at $27.75 a share its first day, the Seattle Post-Intelligencer wrote then. Redmond was originally going to offer 2.5 million shares, but that was increased to just over 3 million thanks to demand. "I've never received as many phone calls about a new offering as I have over the last month (with Microsoft)," Ron McCollum, a broker with Paine Webber in Seattle, told the paper. At the time, Bill Gates owned 45 percent of the company while Paul Allen owned about 25 percent. Microsoft is currently valued at $248.45 billion.
Apple: 1980
Apple went public in December 1980 at $22 per share. At the time, it was the largest IPO since Ford in 1965. In October, after Steve Jobs's death, the Wall Street Journal looked back at its Apple IPO coverage and found that it fell on page 12, behind stories like President-elect Ronald Reagan's picks for Cabinet posts and Chrysler's debt problems. "Apple made less than $100 million from selling stock to the public — or what Apple makes now in roughly eight hours of sales," the Journal said this week. Apple is currently valued at $422.37 billion.
An initial public offering like Facebook's doesn't come along every day, or even every decade, and you better believe folks are talking about it. The social networking giant's $5 billion IPO filing revealed a ton of previously unconfirmed data about the company, including how it makes its money and how much it's been making, who and what it fears going forward, who owns how much of it, and much, much more.
Post a Comment