Thursday, February 2nd 2012

Facebook Files $5 Billion IPO, Values it at Nearly $100 Billion

Facebook Inc., has finally filed to go public with its IPO, with plans to raise US $5 billion, according to a figure used to calculate the registration fee. The company seeks to trade under the ticker symbol "FB", although it did not list an exchange. It is speculated by those close to the company that Facebook is aiming at a far greater offering that will value to the company close to $100 billion. Facebook also provided some interesting stats about its operations in its filing. The EDGAR filing documents can be accessed here.

Source: Engadget
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30 Comments on Facebook Files $5 Billion IPO, Values it at Nearly $100 Billion

#1
Volkszorn88
Makes me happy every day knowing I don't have a facebook.
Posted on Reply
#2

source
Facebook in its IPO filing revealed that it now has 845 million users, nearly half the world's Internet users. And it reported $1 billion in profit on $3.7 billion in revenue last year, making a company once derided for having no business plan one of the valley's top profit machines.

Industry sources expect the stock offering will set Facebook's overall value at $75 billion to $100 billion. The papers filed Wednesday do not specify how many shares will be sold, their offering price, or the date they will be offered; the company is expected to release more details in coming weeks.
So basically they are being valued at 75-100 times trailing earnings. Yeah, that sounds legit. :wtf:
#3
LagunaX
Oh yeah I really want to give Zuckerberg some more money as if he doesn't have enuf billions now.

Can you say big brokers and insiders making cash off the initial IPO as us mindless lemmings rush towards the wave of buying only to hit the bursting bubble shortly after?

No thanks.
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#4
Jaffakeik
how could they make such profit, are people really so stupid to buy extras and premiums in facebook games for money?
Posted on Reply
#5

What's interesting to me is that they have close to a billion users, half of all internet users worldwide, and they're making basically a dollar and change off of each one. Considering that they only have another billion potential users, where's the growth going to come from that justifies this kind of valuation? You can buy Microsoft for 11 times earnings. MSFT is a mature company, but still, you have to have at least a colorful story for how you intend to grow rapidly enough to justify a valuation of at least 75 times.

If recent media IPO's like Zynga and Pandora are any indication, people aren't impressed by the razzle-dazzle of tech any more. I think both of those offerings are now selling for about 20% less than what they sold for on the day they were listed. A lot of people got severely burned in the dot com boom and most haven't forgotten about that yet.
#6
Completely Bonkers
The wonderful fall and rise of some "virtual" tech companies like fb is that they can easily be substituted, just-like-that! It isnt like a utility company with a geographically tied customer base, or a manufacturing company with a specific production or distribution capability, or a resource like oil, gold or diamond.

It wouldn't take even $1billion dollars for someone to develop an alternative incl. sufficient promotion to get it successfully off the ground. (linked-in?). And while they might not get quite the market share of fb which succeeded while there was a void in the market for this type of application, a credible alternative would turn that "$100 billion value" of fb very quickly down to "$10 billion" and possibly very quickly again down to "$1 billion".

There is only downside, not upside.

However, IT IS A SMART MOVE of Zuckerbergman to capitalise NOW while he can on perceived "overvalue". You have to admit, he's a clever cookie.
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#7
W1zzard
by: Completely Bonkers
However, IT IS A SMART MOVE of Zuckerbergman to capitalise NOW while he can on perceived "overvalue".
actually there is no big money to be made from this IPO i hear (in the opinion of many bigger investors). facebook already has like 300 investors that hold a sizable share of the company - these are the guys that will make huge profits from a good ipo
Posted on Reply
#8
Yo_Wattup
by: Arciks
how could they make such profit, are people really so stupid to buy extras and premiums in facebook games for money?
its from all the ads dude
Posted on Reply
#9
Completely Bonkers
This included news that Facebook's net income in 2011 rose 65% to $1bn, off revenues of $3.71bn. It was disclosed that founder Mark Zuckerberg owns 28.4% of Facebook, and also that the network now has 845 million monthly users and 443 million daily users.
Those revenue numbers are very impressive.
Posted on Reply
#10
NC37
by: Arciks
how could they make such profit, are people really so stupid to buy extras and premiums in facebook games for money?
I think you just answered your own question...;)
Posted on Reply
#11
R_1
Facebook has some real value. Same goes for Google, Steam and other companies, doing services, that people actually want. I think that Facebook made a clever move, because it will obtain a lot more money for that 5 billion IPO.
Posted on Reply
#12
Ammonite
I'm still waiting for the time when FaceBook finally fizzles out. Its constantly trying to reinvent and redesign itself to keep things interesting, but how long until crappy apps and status updates just get old?

I'm still hoping FB and social networking will pass eventually and in a couple of decades be remembered as one of many things that defined this time and the generation associated with it.
Posted on Reply
#13
R_1
Well, to my understanding what is to be a current technology trend is leaning towards Google business model and lately Apple contribution to a modern channel for digital media distribution. Both of these business practices are fairly new and only recently become possible, so there is no guarantee that "old" ones like Big media are not going to strangle them, through legislation or something equally clever. Facebook long term success shall be considered very likely , if Google and company prevails in this rivalry. Let's see, future shall reveal itself.
Posted on Reply
#14
_JP_
Good for them, still not going to create an account.
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#15
chaotic_uk
by: Arciks
how could they make such profit, are people really so stupid to buy extras and premiums in facebook games for money?
one word comes to mind = YES :D
Posted on Reply
#16
Ammonite
by: chaotic_uk
one word comes to mind = YES :D
Not to mention the advertising revenue must be insane.
Posted on Reply
#17
NdMk2o1o
by: Ammonite
Not to mention the advertising revenue must be insane.
This is the main source of their revenue, not from add-ons or premium content as FB does not charge their customers for ANYTHING, 3rd party games and apps DO have premium options though.
Posted on Reply
#18

Why do you do an IPO? Going "public" as they say imposes a lot of restrictions and requirements that a private company doesn't have. Just take for example the information presented in their S1 filing about revenue, number of users and so on. This was all carefully guarded information in the past. So, why do it? FB could have continued to get investment in other ways. They haven't grown to this point by sucking on the quantum vacuum.

I don't think anyone knows the answer to this for certain, but I have a couple of guesses. First, I think FB sees it's rate of growth starting to flatten. So last year they grew by 65% in terms of revenue. What will it be for next year? Once analysts get a chance to digest the numbers presented, we'll get some idea of their future trajectory and my bet it's down. But this was also true for Google and that has worked out well for investors.

Second, I think FB is feeling the competition from the fact that so many other web destinations are incorporating interactive "community" features. Someone mentioned Steam, and that's a perfect example. You can go in Steam and not only play "real" games but interact with your friends while doing so. There are also the more obvious competitors like Google +. There you have a service that has been designed from the ground up to out facebook facebook. I don't think there is any doubt that things such as these currently impact facebook's growth and that their influence and affect will only accelerate.

So by going public now, I think Facebook quite literally capitalizes on the strength of its current market dominance and does so before the pending threats to that dominance are fully recognized.
#19
pr0n Inspector
by: Ammonite
I'm still waiting for the time when FaceBook finally fizzles out. Its constantly trying to reinvent and redesign itself to keep things interesting, but how long until crappy apps and status updates just get old?

I'm still hoping FB and social networking will pass eventually and in a couple of decades be remembered as one of many things that defined this time and the generation associated with it.
You mean like Usenet newsgroups, IRC, IM and eventually forums?

Are you by any chance viewing this page by sending an email to a daemon which runs wget and mails the page back to you?
Posted on Reply
#21
Animalpak
have access to personal data and privacy of people have a very high price but also a modern way to hurt people ... International criminal organizations benefit.
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#22
Roph
Just remember how fast Myspace died :)
Posted on Reply
#23
Ammonite
by: pr0n Inspector
You mean like Usenet newsgroups, IRC, IM and eventually forums?
Systems like IRC and forum software are practical and have been picked up by billions of people for millions of websites, used because there is no better alternative.

FaceBook is just a novelty act that resides on a single website, its best practical use being ways for companies to connect and market to a large online audience (hardly useful for the end user). Sure, its embedding itself into people's lives, but so did MySpace and all that other junk that has since dried up and become nothing like its former self.

All it'll take for FaceBook to die is another person bettering it, or people getting bored of it.
Posted on Reply
#24
NinkobEi
Hate to say it but Facebook may be around to stay for a while. Technology only phases out as other better things make it obsolete. Facebook changes with the times very well. And barring some catastrophic business model disaster, it has one valuable commodity: LOTS OF LOYAL USERS.
Posted on Reply
#25

by: NinkobEi
Hate to say it but Facebook may be around to stay for a while. Technology only phases out as other better things make it obsolete. Facebook changes with the times very well. And barring some catastrophic business model disaster, it has one valuable commodity: LOTS OF LOYAL USERS.
Yes and no. A lot of people actually get roped into the online games like Farmville because your success in the game often depends on what your friends playing the game do. I read an excellent explanation of this a few weeks ago. The person got invited to play Farmville and didn't feel able to leave without hurting their friends. I know it sounds ridiculous, but it was from a journalist and was very convincing.

I don't know how many people are on FB only for the purpose of getting friends off their back, but I suspect it's a decent sized number. If so, you're not going to make much money off of those people.

Another thing to keep in mind if you're an investor is the fact that technically, if you use the SEC definition of what constitutes a "private company", FB hasn't been "private" in a while. The SEC requires companies with more than 500 shareholders to go public. FB got around that rule by selling shares to corporate entities that then repackaged the shares to sell to investors. I may have some of the details wrong, but the bottom line is that a lot more than 500 people have an existing financial interest in FB (other than just employees) and those people stand to make a lot of money depending on how the IPO is valued.
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