Facebook has finally filed for an Initial Public Offering (IPO) that could value the company at between $75 billion and $100bn, making it potentially the most valuable technology company stock market debut of all time.
In a securities filing the eight-year-old company said it is
seeking to raise $5bn but this figure is only a placeholder and will
likely change. According to sources who spoke to the Wall Street Journal, Facebook hopes to raise as much as $10bn when it
goes public in the spring.
As part of the filing to regulators in the States, Facebook has revealed that it produced $3.71bn in revenue in 2011, up from $1.97bn a year earlier. the shares issued by the IPO will be split into A and B shares, in the former will get one vote with the B shares getting 10 votes each. Unsurprisingly, founder Mark Zuckerberg, will be getting the latter.
In a letter to potential shareholders, founder Mark Zuckerberg, tried to reassure the public that Facebook will continue to focus on the user experience and not on revenue growth: “We don’t build services to make money; we make money to build better
services. These days I think more and more people want to use
services from companies that believe in something beyond simply
In its filing Facebook also claimed it had 845 million users, which is 39 per cent up on a year ago, with over half of these logging-on on a daily basis which is almost a 50 per cent rise on 2010. It is these users which are Facebook’s most valuable asset and what potential investors will be looking to exploit.
The filing also highlighted that while advertising is still hugely important to the company, it is becoming less and less important down from 98 per cent in 2009 to 85 per cent last year. This is because Facebook is getting more and more revenue from in-app purchases which it shares with developers. Zynga, which applied for its own IPO last year, is the main partner in this respect, with a huge 12 per cent of Facebook’s 2011 revenue coming from games developer.
The 27-year-old Zuckerberg, who owns 28.4 per cent of the company, has been reluctant to push forward with an IPO, as he felt it could mean employees would lose focus on making great products and look more to the company’s stiock price.
However as Facebook and Zuckerberg realised it was going to have more than 500 shareholders by the end of 2011 , which would trigger a regulatory obligation to file financial results anyway, both felt it was more logical to take advantage of the money rasied by the IPO.
Will going public change Facebook? Will the increased pressure from shareholders mean it will force more ads on users? We’ll have to wait and see to get a definitive answer but for now let us know what you think in the comments below.