Facebook hopes IPO will bring in $5 billion
Stock offering not yet priced; sale could happen sometime in May
NEW YORK – Facebook made a much-anticipated status update Wednesday: The Internet social network is going public eight years after its 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. Facebook, which is now based in Menlo Park, Calif., hopes to list its stock under the ticker symbol, “FB,” on the New York Stock Exchange or Nasdaq Stock Market.
In its regulatory filing with the Securities and Exchange Commission, Facebook Inc. indicated it hopes to raise $5 billion in its IPO.
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 of 845 million users. 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.
Following the model of Google co-founders Larry Page and Sergey Brin, Zuckerberg set up two classes of stock that will ensure he retains control as the sometimes conflicting demands of Wall Street exert new pressures on the company. He will have the final say on how nearly 57 percent of Facebook’s stock votes, according to the filing.
Forbes magazine estimated Zuckerberg’s wealth at $17.5 billion in its most recent survey of the richest people in the U.S. A more precise measurement of Zuckerberg’s fortune will be available once the IPO is priced and provides a concrete benchmark for determining the value of his nearly 534 million Facebook shares.
The IPO will also mint hundreds of Facebook employees as millionaires because they have accumulated stock at lower prices than what the shares are likely to be valued at on the open market.
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 28th birthday in May.
When most companies go public, they let Wall Street investment banks handle everything. That means the initial stock price is reserved for big institutional investors, shutting out the average investor.
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.
The documents show that Facebook is thriving.
The company earned $668 million on revenue of $3.7 billion last year, according to the filing. Both figures nearly doubled from 2010.
What’s not in the documents, 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.