Initial hit from Reuters: Social media giant Facebook filed for its hotly anticipated initial public offering on Wednesday, setting the stage for Silicon Valley’s largest-ever IPO.
The world’s largest social network, a dorm room project for Harvard dropout Mark Zuckerberg that exploded in popularity and vaulted to Silicon Valley’s top tier within eight years , submitted preliminary IPO documents to the U.S. Securities Exchange Commission after weeks of frenzied speculation.
The company said it is seeking to raise up to $5-billion (U.S.).
Here's some more details of the very lengthy filing:
Reports 2011 net profit of $668 million
Reports 2011 revenue of $3.7 billion
It did not specify the amount of shares or projected price range in the filing, nor did it specify which exchange it hopes to list its shares on.
The $5 billion amount is a placeholder used to calculate fees and may change. The Menlo Park, California-based company hired Morgan Stanley, JPMorgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp., Barclays Plc and Allen & Co. to manage the IPO.
the top line ad growth is not that impressive on a quarterly basis
18% q/q in Q4 (just for ads).
It was 3% q/q in q3, 22% in q2 and negative in q1
their payments rev has doubled in the last year from $76m in Q410 to $188m in Q411
North America and Europe slowing the most... Asia growing
Good snap insight, thanks Eric. Keep it coming if you can.
FB has $4b in cash on its balance sheet (at end of December)
FB's headcount in context... 3200 now... YHOO has 14,000
Forgot Reed Hastings of NFLX is on the FB board
Erskine Bowles is on the FB board and he's also on the Morgan Stanley board... hence they are the lead underwriter
FB already has more operating income annually than Amazon. $1.8B vs. $1.75B
At $100B valuation, if you buy, you will be paying 27x last year's sales. Back in 2004, IPO investors in Google paid 15x their last year's sales
First glance at the filing shows a massively profitable company. Twenty-seven cents of every dollar Facebook took in last year went straight to the bottom line. Compare that with Wal-Mart, where the comparable number is about three cents. No wonder private investors were begging for a piece of this.
$31m in total comp for Sheryl Sandberg last year
There will be a lot of speculation about values in the coming weeks. But I think one of the main things to focus on is the growth and profitability trend. Revenue was up 88 per cent and profit up 65 per cent. This is a very viable business. We are getting numbers now on how big this sector could really be.
Sandberg owns 1.9m $FB shares. The CFO owns 2.2m. Peter Thiel owns 44m. Zuck 1.07B
The actual price for the IPO will likely come in a few weeks. The stock will probably begin trading in May. It's possible the company decides to increase its sale from the $5-billion listed today, to as much as $10-billion.
From Zuckerberg, in the letter accompanying the documents: “We often talk about inventions like the printing press and the television. Today, our society has reached another tipping point.”
“There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future,” said Zuckerberg, whose $500,000 base salary will drop to a dollar from Jan.1 2013.
“The scale of the technology and infrastructure that must be built is unprecedented.”
And I see that he has agreed to reduce that amount to $1 in 2013. It's all about the stock options.
Interesting that Mark Zuckerberg will retain firm control over the company. He owns 28 per cent of the company before the IPO. His new ownership stake hasn't been disclosed. But a dual class share structure will ensure he remains at the helm.
More from Zuckerberg in the filing: "Once again, Facebook exists to make the world more open and connected, and not just to build a company. We expect everyone at Facebook to focus every day on how to build real value for the world in everything they do...We believe that we have an opportunity to have an important impact on the world and build a lasting company in the process. I look forward to building something great together."
One of the interesting things about this filing is a section where Facebook says it is still weighing whether to try to get into the Chinese market. On one hand, it's huge, on the other hand, well, everything else (censorship, regulations, hacking etc.)
The company also doesn't seem to be making much, if any, money off mobile advertising, which is going to become a bigger deal as more and more people access Facebook from their phones.
Morgan Stanley, one of the companies hired to manage the IPO, up 0.7% in post market trade. It was up 4% in regular trade today. Note its participation was widely rumoured in the market during day trading hours.
In terms of all major decisions, this is still going to be Zuckerberg's company. He controls a majority of the voting shares (and, obviously, remains CEO).
Metrics to make any website envious: Facebook said in its filing that it has 845 million users, up 39% from a year earlier. The company also said 483 million of those users log into the site daily, a 48% increase from a year earlier.
So how does Facebook's IPO stack up? It could still come in above $5-billion, but even at $5-billion, that's far above the $1.67-billion that rival Google Inc. fetched in its own IPO back in 2004. The title for the largest IPO in U.S. market history? According to Capital IQ, that goes to Visa, with its $17.8 billion offering in March 2008.