Facebook Sets Stage for IPO

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Author: John Duckgeischel on February 21, 2012 - 11:32 PM

Facebook filed the IPO required S-1 document with the SEC Wednesday as it will be trading the ticker symbol “FB” as it seeks to raise $5 billion with its blockbuster stock offering. The social networking company creating a new paradigm in communications and it went on to accumulate over 800 million members worldwide. Now it has decided to move forward with its IPO, which has been highly anticipated on Wall Street. If Facebook is valued at $100 billion, it would rank slightly behind the 25^th largest company, McDonald’s according to Howard Silverblatt at Standard and Poor’s. Facebook’s 2011 numbers detailed in its PO filing are impressive with net income up 65% to $1 billion, revenue up 88% to $3.7 billion and year over year membership up by a substantial 39%. Advertising dollars accounted for 85% of the company’s revenue last year.

Currently Facebook doesn’t use display advertising on mobile devices, a potential revenue upside since it has experienced high mobile device usage growth. In spite of all the good news there are concerns about slowing growth Facebook ad sales up 104% in 2011, however growth in 2012 is slated for just 52% growth. "Facebook is not as effective as paid search (on Google, Yahoo and Microsoft)," states Dave Beltramini, director of online strategy for G5, a marketing services firm. "The intent of consumers on Google is more about shopping; on Facebook, people are more social, looking at photos of their friends' kids." Facebook had to go public as it was about to exceed the 500 shareholder rule for companies with over $10 million in assets. Now it is going forward with filing all of the necessary paperwork to meet an April 30, 2012 deadline that it faces. The infusion of IPO cash will shore up Facebook as Google+ and other competing offering keep the pressure on the social networking leader. Some anticipate that some of the funds will be used in acquisitions or for exploring new technologies.

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