Facebook files for IPO

Company reveals last year's fiscal records which show a $1 billion profit
Adam Smith

February 2, 2012

Yesterday, as expected, Facebook filed for its IPO or Initial Public Offering.

In other words, the company is poised to sell shares of itself on the stock exchange, where it will apparently be known as ‘FB’.

The IPO is expected to raise at least $5 billion for Mark Zuckerberg and friends, although that could easily rise up towards the $10 billion mark.

Facebook is expected to be valued at between $75 billion and $100 billion in total, a colossal figure whichever way you look at it.

The downside of becoming a publicly traded company is that Facebook will be expected to hit investor’s expectations when it comes to profits. Not only this, it will be forced to share information the social network has previously kept hidden, such as how successful it is with regard to monetising its service.

In fact, with the filing of the IPO the first juicy details have already sneaked out, according to a report in the Wall Street Journal.

Facebook now has 850 million users – closing on that billion mark, although growth slowed somewhat in the last quarter of 2011 (to around 5% from a previous mark of 7%).

Last year, the company took $3.7 billion in revenue, with a profit of $1 billion. 85% of the money came from advertising, the rest from social gaming payments and other miscellany.

While 2011’s revenue was almost double the previous year’s, showing strong growth, the figures actually fell slightly short of what analysts were expecting (in excess of $4 billion revenue).

The focus is now going to be on hitting those sort of analyst expectations and keeping the stock price buoyant.

But further pushing on the monetisation front has to be balanced against disillusioning that vast user base.

As we said yesterday, it’s going to be a very fine line to tread, and Google+ will be waiting on the other side of the tracks for those who object to any new, more financially driven direction.


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