It’s Official: Facebook Goes Public, Files for IPO
- Posted on February 1, 2012 at 5:34pm by
Christopher Santarelli
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(The Blaze/AP) — Facebook made a much-anticipated status update Wednesday: The Internet social network is going public eight years after its computer-hacking CEO Mark Zuckerberg started the service at Harvard University.
That means anyone with the right amount of cash will be able to own part of a Silicon Valley icon that quickly transformed from dorm-room startup to cultural touchstone.
If its initial public offering of stock makes enough friends on Wall Street, Facebook will probably make its stock-market debut in three or four months as one of the world’s most valuable companies.
In its regulatory filing with the Securities and Exchange Commission, Facebook Inc. indicated it hopes to raise $5 billion in its IPO. That would be the most for an Internet IPO since Google Inc. and its early backers raised $1.9 billion in 2004. The final amount will likely change as Facebook’s bankers gauge the investor demand.
Joining corporate America’s elite would give Facebook newfound financial clout as it tries to make its service even more pervasive and expand its audience. It also could help Facebook fend off an intensifying challenge from Google, which is looking to solidify its status as the Internet’s most powerful company with a rival social network called Plus.
The intrigue surrounding Facebook’s IPO has increased in recent months, not only because the company has become a common conduit -for everyone from doting grandmas to sassy teenagers- to share information about their lives.
Zuckerberg, 27, has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds. In Zuckerberg’s case, a lawsuit alleging that he stole the idea for Facebook from some Harvard classmates became the grist for a book and a movie that was nominated for an Academy Award last year.
Even before the IPO was filed, Zuckerberg was shaping up as his generation’s Bill Gates – a geek who parlayed his love of computers into fame and fortune. Forbes magazine estimated Zuckerberg’s wealth at $17.5 billion in its most recent survey of the richest people in the U.S.
Depending on how long regulators take to review Facebook’s IPO documents, the company could be making its stock market debut around the time that Zuckerberg celebrates his next birthday in May.
The IPO filing casts a spotlight on some of Facebook’s inner workings for the first time. Among other things, the documents reveal the amount of Facebook’s revenue, its major shareholders, its growth opportunities and its concerns about its biggest competitive threats.
What’s not in there, yet, is Facebook’s market value. That figure could hit $100 billion, based on Facebook’s rapid growth and the appraisals that steered investors who bought stakes while the company was still private.
Facebook heads a class of Internet startups that have been going public during the past year.
The early crop has included Internet radio service Pandora Media Inc., professional networking service LinkedIn Corp. and daily deals company Groupon Inc. Most of those Internet IPOs haven’t lived up to their lofty expectations. The list of disappointments includes Zynga Inc., which has built a profitable business by creating a variety of games to play on Facebook. Zynga’s stock fell 5 percent below its IPO price on the first day of trading.
Facebook stands apart, though. As it rapidly expands, people from Silicon Valley to Brazil to India use it to keep up with news from friends and long-lost acquaintances, play mindless games tending virtual cities and farms and share big news or minute details about their days. Politicians, celebrities and businesses use Facebook to connect with fans and the general public.
It’s becoming more difficult to tell whether going to Facebook is a pastime or an addiction. In the U.S., Facebook visitors spend an average of seven hours per month on the website each month, more than doubling from an average of three hours per month in 2008, according to the research firm comScore Inc.
More than half of Facebook users log on to the site on any given day. Using software developed by outside parties – call it the Facebook economy – they share television shows they are watching, songs they are playing and photos of what they are wearing or eating. Facebook says 250 million photos alone are posted on its site each day.
To make money, Facebook sells the promise of highly targeted advertisements based on the information its users share, including interests, hobbies, private thoughts and relationships. Though most of its revenue comes from ads, Facebook also takes a cut from the money that apps make through its site. For every dollar that “FarmVille” maker Zynga gets for the virtual cows and crops it sells, for example, Facebook gets 30 cents.
For all of Facebook’s success, the company has had its share of troubles. It went through a series of privacy missteps over the years as it pushed users to disclose more and more information about themselves. Most recently, the company settled with the U.S. Federal Trade Commission over allegations that it exposed details about people’s private lives without getting legally required consent. And the legal fights over Facebook’s origins have been embarrassing and sometimes distracting, though Zuckerberg has consistently denied allegations that have depicted him as a ruthless weasel.
Zuckerberg has made it clear he isn’t especially keen on leading a public company. He has said many times that he prefers to focus on developing Facebook‘s products and growing the site’s user base, rather than trying to hit quarterly earnings targets in an effort to keep investors happy.
Lately, though, he has matured into the role, said Scott Kessler, a Standard & Poor’s equity analyst who follows Internet stocks.
“Clearly he is a very smart and shrewd person,” he said.
Zuckerberg has surrounded himself with other savvy executives, who are often more experienced. They include Chief Operating Officer Sheryl Sandberg, who helped build Google’s advertising business before Facebook lured her in 2008. Facebook’s finance chief is David Ebersman, a former executive at biotech firm Genentech.
Amid the buoyant optimism about Facebook’s prospects as a public company, some analysts see troubling parallels to the dot-com boom of the late 1990s, which turned into a devastating bust in the early 2000s. The biggest fear is that some investors will become so enamored with Facebook’s brand and brawn that the will try to buy the IPO share with little financial analysis or recognition of the risks.
“It’s a one-day circus,” said John Fitzgibbon, founder of IPOscoop.com.
The IPOs of Zynga and LinkedIn showed that success isn’t guaranteed even for profitable companies with huge followings. Zynga’s stock is currently trading just slightly above its IPO price. LinkedIn is considerably higher, but still far below the $122.70 record that it hit on its first trading day.
“It seems there’s so much excitement, innovation around Internet startups in Silicon Valley and yet a lot of these companies … have not performed well at all,” Kessler said. “The concern is the sustainability of the growth and profitability. It’s very, very difficult to prove those things out over a short period of time.”
Michael Pachter of Wedbush Securities discussed on Fox News Business this afternoon the excitement surrounding the speculation of the filing, and what the IPO will mean for Facebook users:
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Comments (38)
mike_trivisonno
Posted on February 2, 2012 at 6:05pmI know a lot of people who are leaving failbook.
Report Post »lylejk
Posted on February 2, 2012 at 5:47pmI know folk who regretted buying into the Google hype. I have to add that I don’t facebook nor will I ever if I had my way (but my sister, niece and nephew do). Zucky already made billions and wants more, but he better watch out when his company goes public. Control of a public beast will be much harder then a private one. I can see short term high gains the folks will loose their shirts. Of course I could be wrong. It’s your decision to buy or not, not mine. It’s my choice not to buy for me (not that I invest in stocks anyway; lol). :)
Report Post »HellPhish89
Posted on February 2, 2012 at 2:34pmme thinks FB would be a great short term investment..
Report Post »seeker9
Posted on February 2, 2012 at 9:36pmWouldn’t buy on IPO day. This one is likely to double, then collapse in a very short time. The posts here indicates a lot of dissatisfaction. I would do more home work before I buy.
Report Post »BuckDoyle4933
Posted on February 2, 2012 at 1:47pmFacebook=Killing America. Do you ever notice how everything is called a “social” network. They want everyone in on it so then the government can slowly and surely control the American people. Every “Social” Network needs to go. They ruin America as a whole. Every coversation is about FACEBOOK! everywhere I go.
Report Post »Nathen
Posted on February 2, 2012 at 2:58pmYou are SUCH a hypocrit! Did you know commenting on an online news story IS SOCIAL NETWORKING?! Wow you are beyond ignorant.
Report Post »MarsBarsTru7
Posted on February 2, 2012 at 12:35pmZuckerberg is setting himself up to have his finances pillaged unless he cashes in his chips as soon as the company goes public. He’s better off taking his winnings and leaving Facebook to die a natural death as a publicly traded Titanic, and moving on to take on some other creative endeavor. If he sticks with Facebook after it goes public, he will rue the day.
Report Post »BuggiOlleo
Posted on February 2, 2012 at 10:08amPresident Obama’s Debt Commission co-chairman, Erskine Bowles, has been serving on Facebook’s board since September 2011. He holds 20,000 restricted stock units, which are a form of stock compensation….HYPOCRITE
Sheryl Sandberg has been Facebook’s chief operating officer since March 2008. Prior to that, Sandberg worked at various organizations including Google, the World Bank and the Treasury Department. She owns 1.9 million Facebook shares, which is less than one percent of the tech titan…another Government Egg..HYPOCRITE
Facebook General Counsel Ted Ullyot. Ullyot holds 1.9 million shares…..what’s not to like about this guy(most attorneys are smart enough to not be sighted for ethics, but Ullyot is butter? read up..if it looks like poop and smells like poop…Well? its probably poop…He is an Attorney for crying out loud..a smart one..check the portfolio…HYPOCRITE
Look, Bully to Facebook!!..wife loves it..
I don’t care who makes cash out of Facebook; you can have at it. On the other hand, frugal business does take some political maneuvering..hence, I cannot condone government officials who are knowledgeable about privileged info then profiting; as if to a jury, it would be prejudiced and unethical.
Brass Tax..these and others were doing fine financially before Facebook public trading..should Government cap the amount of cash these folks can earn or just their inside info…?
Report Post »cyclops
Posted on February 2, 2012 at 10:24amWell all the politicians are probably already on board before this IPO debut……..LOL!!!!!!
Report Post »LouC57
Posted on February 2, 2012 at 7:44amSoooooooo, exactly “how” does Facebook make money for investors again?
Report Post »spurjimmy
Posted on February 2, 2012 at 7:35amAnd just like so many tech stocks before them, they’ll make huge profits, the government will step in and declare some new regulation and the small investors will lose everything after its popularity wanes.
Report Post »Worldsapart
Posted on February 2, 2012 at 1:04amWhat‘s with the Blaze telling me I’m not logged in?
Report Post »I am seeing this after all, “worldsapart, Speak Your Mind.”
Gumbercules
Posted on February 1, 2012 at 10:46pmIf you guys want more details on this article, please see the article below . . .
Report Post »http://www.myspace.com
ZaphodsPlanet
Posted on February 1, 2012 at 11:53pmI think you should have said, if you want to see the forecast for Faceplant stock look into http://www.myspace.com
Love how they‘re trying to value a company that has already hit it’s peak in user numbers with income under $3B at $100B….. uh… can you say Dr. Kopp.com? Not that building a company with that much revenue is anything to laugh at. But it’s all vapor people. If Google, or better yet, another unknown comes along and beats them at their game the whole idea and perceived BS value is bye bye… see… http://www.myspace.com Most people I know are now asking me how to delete their Facebook accounts than anything else. I’ve deleted a couple of mine so far. Though they’re probably not really deleted.
Zuckerberg gives me the creeps big time. Anyway, have fun loosing your money people. This whole thing oddly stinks of the last dot com boom and bust.
If I had any money I wouldn’t put it in this stock. I hate what Google is doing but if they were just doing their IPO now I wouldn’t hesitate. Facebook has so little redeeming value in my mind. It’s the ultimate narcissistic outlet for people, but beyond that… it’s like useless. As a web developer, what Zuckerberg is really trying to do is completely get you off the rest of the net and under his thiefdom. There is no easy way to pull data off FB for rebroadcast , but there are tons of ways to pull info into it. It’s a one way street, and dear god it’s boring as hell. Sorry… it’s reall
Report Post »sparkspeaks
Posted on February 1, 2012 at 10:28pmOh, also….just in case any of you are wondering. When you go into the FB system to permanently delete yourself from it….you will find that it takes 14 DAYS for this to happen. Anyone got an understanding why this is the case? 14 DAYS???????????????????????????????????????
Report Post »Makes you stress out just thinking about it.
sparkspeaks
Posted on February 1, 2012 at 10:25pmHeads up. I got off FACEBOOK before they forced us to go onto Time Line. Also, just so those who don’t believe what is actually happening…..as I was typing to my friends/ “followers or audience” what I was learning from GBTV, I watched in horror as my script was being erased backwards. This occurred 3 times in a row. I believe that there are key words, and concepts that cause what we express to call attention to watchers out there. I’ve never experienced this before.
Report Post »MCDAVE
Posted on February 1, 2012 at 8:34pmI don’t trust the stock markets..Its more like a Casino than a sound investment..Face book will soon be bankrupt and a handful of politicians will make billions on the insider trade deal
Report Post »Jedidavid
Posted on February 1, 2012 at 8:12pmI thought about buying stock in FB… then I thought to myself, “Self, how long before the next “Facebook” comes along?” and FB goes the way of Myspace…
Report Post »seeker9
Posted on February 2, 2012 at 9:16pmI have been investing in stocks for 20+ years, and have never participated in an IPO. My understanding is you need an account at one the participating brokerages (=high commission). FB has a lot of interest, so most likely will near double it’s initial offering price. Only a fool would hold on after doubling their money in a day, hence the price will collapse. Never buy an IPO in the after market or you will be the greater fool. Give it some time to get over the craziness. After all, there are over 2000 other stocks out there.
Report Post »EVENT-HORIZON
Posted on February 1, 2012 at 8:03pmAmusing ourselves to death (somewhat off topic).
http://www.recombinantrecords.net/docs/2009-05-Amusing-Ourselves-to-Death.html
The cartoon listed at the link above interesting. I don’t believe that there is some type of conspiracy behind FB. However there is a huge POTENTIAL for abuse, especially in the future. As processing power and data storage capabilities increase, the potential for exploiting FB data will become even greater. Some type of reasonable caution is necessary.
Report Post »zarina4u
Posted on February 1, 2012 at 6:54pmHe still has to look at the ugly face everyday in the mirror. No amount of money can change that.
Report Post »zarina4u
Posted on February 1, 2012 at 6:52pmHe may be rich but he is one ugly kid. Plastic surgery couldn’t fix that face, voice lessons couldn’t fix that whinning voice. Kinky hair, droopy eyes. Piehole mouth. He is no Tim Tebow.
Report Post »bloptop
Posted on February 1, 2012 at 11:20pmYou‘re just mad because you’re a nobody.
Report Post »Rob_M
Posted on February 1, 2012 at 6:51pmGood for them, I guess.
Report Post »Dick Parker
Posted on February 1, 2012 at 6:41pmHow the do I get this waste of time and memory off my system…..
Report Post »s
kingssman
Posted on February 1, 2012 at 6:37pmZuckerberg, a self made billionaire, had an idea, a dream, ran on it. The business structure caught on so well that it expanded, profitable, and now a cornerstone of “social networking”
America needs more Zuckerbergs, young entrepreneurs that can show future generations that if you trust a free market, a friendly business enviroment, you can become a self made millionaire without the govt aid, welfare, or require the FEDs to make you rich.
Report Post »Meyvn
Posted on February 1, 2012 at 6:27pmmeh
Report Post »Romney_Shromney
Posted on February 1, 2012 at 6:19pmPUBLIC offering my a$$- Only Zuckster cronies and liberal politicians will be getting the first pick at FB’s initial stock offering. And then the share price will skyrocket, and whoila, more rich liberals who support Obama
Report Post »Linda Vigliotti
Posted on February 2, 2012 at 7:52amYou hit the nail right on the head with that one.
Report Post »P8riot
Posted on February 1, 2012 at 6:09pmdon’t buy. this will eventually end up just like “myspace”
Report Post »P8riot
Posted on February 1, 2012 at 6:12pmjust like “myspace” (which facebook took members from) – there is no way to patent the idea. Anyone can start up a website and then its simply a matter of temporary popularity
Report Post »Sirfoldallot
Posted on February 1, 2012 at 5:53pmI see the “.com ” bubble coming
Report Post »CatB
Posted on February 1, 2012 at 6:26pmYes .. getting the cash out before it all goes bust.
Report Post »MyAgendaIsTruth
Posted on February 1, 2012 at 5:48pmFacebook Inc.’s impending initial public offering will likely net its 27-year-old founder Mark Zuckerberg a fortune of $28 billion. And he gave a failing school district $100 million. That is a FORTUNE to you and me but is chump change to someone worth $28 billion so, I am not impressed by the gift. Plus he might as well just burn the money for all the good it will do the students. Everything is relative and perception is reality.
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