About an hour ago, Facebook has finally filed for IPO. The initial public offering was set at $5 billion (overshadowing Google’s IPO at $1.7 billion in 2004). Everyone with vested interest waited for this to happen and there were many who draw conclusion too soon that it might get delayed or so. As big as Facebook is the anticipation that this step would define the boom in web investing. Shares for the company could start trading as early as May this year.
According to a Reuters.com article, Facebook filed on Wednesday to raise a targeted $5 billion in a hotly anticipated initial public offering, setting the stage for Silicon Valley’s biggest-ever IPO. The world’s largest social network, a dorm room project for Harvard dropout Mark Zuckerberg that exploded in popularity and vaulted to Silicon Valley’s top tier within 8 years, said in its preliminary filing that its net income rose 65 percent to $1 billion in 2011, off revenue of $3.71 billion.
The long-awaited submission kicks off a months-long process that will culminate in Silicon Valley’s biggest coming-out party since the heyday of the dotcom boom and bust. Facebook, which said it now has 845 million active users, appointed Morgan Stanley, Goldman Sachs and JPMorgan its lead underwriters. Other bookrunners included Bank of America Merrill Lynch, Barclays Capital and Allen & Co. (Reporting by Alistair Barr, Poornima Gupta, Gerry Shih and Sarah McBride, Writing by Edwin Chan)
Facebook’s earning is hinged greatly on advertising, which accounted for 89% of its annual revenue last year, or about $3.8 billion. Google raked in $37.9 billion last year, 96% of that from ads. Just looking at these numbers make my head turn in circles. How did these dotcom giants achieve such web presence dominance?
Facebook was forced to go public because it already reached the limit 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. Rebecca Lieb, an analyst at market researcher Altimeter Group, said that Facebook intends to develop ads that are more integrated into user profiles, such as those that essentially “freeze” a brand’s newsfeed post and turn it into an ad that’s only visible to someone following that brand, or a friend of a follower.
As everyone probably knows by now, the timing of the IPO is not something that Zuckerberg really wanted or is prepared for. Facebook 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 in the United States. Their deadline was pegged on April 30, 2012.
Would you be interested to buy some shares? I am…