Facebook Finally Files for IPO
Facebook officially filed paperwork for its long-anticipated initial public offering on Wednesday, indicating it hopes to raise $5 billion in what will be one of the biggest IPOs ever for an Internet-based firm. The IPO had been rumored since last Friday, when the Wall Street Journal broke the story, but Wednesday’s filing makes it official.
According to the filing, the world’s largest social network earned $1 billion last year on total sales of $3.7 billion. As of December 31st, the company had 845 million active daily users, giving it the world’s most coveted platform for delivery of display ads. Facebook became profitable in 2009, five years after it was launched by Mark Zuckerberg in a Harvard dorm room, earning $229 million that year on revenue of $777 million.
The majority of Facebook’s 2011 revenue came from advertising revenue, which generated nearly $3.2 billion, or 85 percent of its total sales. The remainder comes from the website’s payment system for virtual goods within apps and games. Called Facebook Credits, the virtual currency is used by the site’s users on games like Zynga’s FarmVille and CityVille. When Facebook credits are purchased, the company keeps 30 percent of the proceeds and gives the remainder to the app developer.
It has not been decided where Facebook shares will trade, but they will trade under the ticker symbol FB. As is usually the case with IPO’s, the company will probably re-file the IPO documents several times over the next few months, adding new details and possibly revising some of the data included in Wednesday’s filing. In the initial filing, no indication was provided in terms of share price or number of shares that will be sold, so a valuation of the company is still not known. Analysts have speculated that the valuation will fall between $85 billion and $100 billion, however.