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Making History: Facebook Files for a $5 Billion IPO

Published by on Feb 2nd, 2012, No Comments

In what is likely the most anticipated and long awaited document ever received by the US Securities and Exchange Commission (SEC), Faceboook has officially filed the prospectus for its initial public offering (IPO).

As rumours predicted, the company is looking to raise $5 billion with investment firm Morgan Stanley acting as lead underwriter with Goldman Sachs, J.P. Morgan, Merrill Lynch and the Bank of America taking secondary positions. Should Facebook raise the money, it will be on the shortlist of the biggest tech IPOs in history.

The timeline puts Facebook’s public offering to hit the market in mid-May and now has to enter a mandated quiet period, so it could mean that it’s latest Timeline feature is the last new product users will see from the social network until that period is up.

In terms of actual numbers, Facebook reports that it has 845 million active monthly users. The company made $3.71 billion in revenue, with a cool $1 billion in profit in 2011 which had nearly doubled since 2010. This profit is also many times more than Google when they went public a while back – they “only” showed a profit of $106 million. Also – that $1 Billion dollar in profit was also the exact same number used by Justin Timberlake’s character ambitions in The Social Network, which showed the beginning of Facebook. Coincidence?

Founder and CEO, Mark Zuckerberg, owns 28.4% of the company, drawing a $483,000 salary, with a $220,000 bonus in 2011. Facebook credits Zynga with providing 12% of its revenue in 2011. But apparently Zuckerberg is looking to shrink his salary to $1 a year from 2013, just like Steve Jobs did…

Having faced some speculation about who exactly owns what, the SEC website has now presented some hard numbers from the S-1 filing. Co-founder and CEO Mark Zuckerberg owns the most equity of anyone – his 1.1 billion Class B shares give him almost a 57 percent stake — about half of which he owns and half of which are owned by others but over which he exercises proxy voting authority. Class A and Class B shares are differentiated by their voting powers among other characteristics with the Class B shares being the most common. Zuckerberg also holds 42.4 million Class A shares which represents a 36.1 percent stake.

Facebook’s filing has stated that he will sell some shares in the IPO although it doesn’t specify how many.

What is also interesting is the many different people who have received stock options in Facebook during its startup years. New York Times reports that the artist David Choe, who painted Facebook’s first headquarters’ walls asked for stocks instead of cash as payment. That was one very smart move, and that stock might be worth $200 million when Facebook’s stocks go public later this year.

The Telegraph has reported that the documents also reveal that Facebook is under investigation by the SEC for transactions on the secondary market, casting new light on the company’s decision to suspend trading for three days last week which resulted in rumours of an imminent IPO being questioned.

The company will also be focussing on mobile in the future commenting that “We had more than 425 million MAUs who used Facebook mobile products in December 2011. We anticipate that the rate of growth in mobile users will continue to exceed the growth rate of our overall MAUs for the foreseeable future, in part due to our focus on developing mobile products to encourage mobile usage of Facebook.”

Sources: AllThingsD, The Next Web

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