TechTalk: Facebook’s Giant IPO
Facebook Inc. has filed an initial public offering that could value the social network between $75 billion and $100 billion. This puts the company on track for one of the biggest U.S. Stock-market debuts of all time.
According to some sources, the young company aims to raise as much as $10 billion when it begins selling shares. The company produced a $1 billion profit last year from $3.71 billion in revenues. Facebook pretty much gets majority of those revenues from advertising, with additional revenues from social gaming and other fees.
In a matter of 8 years, Facebook has proven to be a force to reckon with – with millions of users interacting and exchanging updates everyday. Its most important contribution probably lies in it being a potential political or social tool. But the question remains though, will Facebook be able to grow into a mature global business keeping both advertisers and subscribers happy while balancing the demands of privacy and profit? This matter remains to be seen.
The company has not decided whether to trade on the New York Stock exchange or on the Nasdaq Stock Market. CEO Mark Zuckerberg, who owns around 28% of the company and holds 57% of voting share power has long been reluctant to join the stock market. According to people who know him, he is fearful of the damage that an IPO could do, and that the employees would lose focus in creating great products.
His thinking however slowly changed when he realized that by the end of 2011, its shareholders will grow to more than 500, which will late prompt a regulatory requirement of publicly reporting company financials. Zuckerberg thought it would make more sense for Facebook to go public so it can also reap its financial benefits. The young CEO says the money that will be raised will be used to pay taxes.
In a letter to potential shareholders, Mr. Zuckerberg said he plans to continue focusing on building products, rather than sales growth. “We don’t build services to make money; we make money to build better services,” Mr. Zuckerberg wrote. “These days I think more and more people want to use services from companies that believe in something beyond simply maximizing. The company has also highlighted privacy issues making it clear that they are there to protect the user’s privacy all the way.