Facebook $100 Billion IPO: 1,000+ New Millionaires Will Be Born In A Single Day


The website – less than 8 years of existence and attracted over 800 million users – has changed the way people across the globe communicate, from organizing political protests to sharing baby pictures. Facebook is now used by 1 in every 13 people on earth, with over 400 million of them (over 50%) who log in every day.

The Initial Public Offer (IPO) of Facebook, one of the most anticipated IPOs of the decade, may finally be here. As we already saw this coming in June last year, the social networking giant is preparing to file the paperwork for an initial public offering that would value worlds’ largest social-networking site and could raise as much as $10 billion and value the company between $75billion-$100billion. Facebook is close to picking Morgan Stanley to lead the deal. People familiar with the matter said that the company is targeting an IPO sometime between April and June. A $10 billion Facebook offering would rank fourth among IPOs for U.S companies apart from Visa Inc, General Motors Co and AT&T wireless. It would rank Facebook as the biggest U.S Internet offering ever, replacing Google Inc, which raised $1.9 billion in 2004 at a $23 billion valuation.

The IPO will mint a new generation of millionaires on the level not seen since Google’s offering. IPO will also test the ability of CEO Mark Zuckerberg to manage a global company whose financial performance will be scrutinized in every 3 months by investors. He had reluctant to push forward with an IPO and people familiar with his thinking said that he was afraid of the damage an IPO could do to the company’s culture. Since Facebook is a private company, there is very little information on how much profit or revenue it actually makes. Currently, it has more than 800 million users and more than 3,000 employees and makes most of its money through advertising.

This year, the overall market has risen, and on Friday other Internet stocks rallied on news that Facebook would soon file for a deal.

Here is the financial metrics for the private company that kept it roaring year-on-year:

• 2007 Revenues: $150 million

• 2008 Revenues: $280 to $300 million

• 2009 Revenues: $550 to $700 million

• 2010 Revenues : $1.86 Billion

• 2011 Revenues: $4.27 Billion

The growth in profit and revenue underscores how Facebook is increasingly making money off its 8-year-old service, which ranks as the world’s largest Web social network with nearly a billion users. If the IPO happens in May, which is what some media reports are speculating, it could, nevertheless, turn out to be the perfect birthday gift for Zuckerberg, who turns 28 that month. That will reinforce Zuckerberg’s position as the world’s youngest billionaire. On the other hand, $10 billion — the amount Facebook will grab from this IPO — is a lot of scratch. Yes, some people will get very rich – Zuckerberg in particular who own 25% of the titan. But the chief Facebook Geek has said he’s not interested in the wealth. For Zuckerberg, winning has always been more important than money.

But its not only about Mark, its also matters for those others who were waiting for this to happen for long. Those who never tasted the reputation of being Millionaire ever before and were putting all their eggs in a basket – today known as Facebook. Now, the day has arrived for all those 1,000+ investors/stock holders who will see the light of after the great transformation in their life. A life and a site – started from a school – that is making them today “Millionaire”.

Facebook employees past and present are already hatching plans on how to spend their anticipated new wealth, even as securities regulations typically prevent employee stock options from being cashed in until after a six-month lock-up period. Facebook’s headcount has swelled from 700 employees in late 2008 to more than 3,000 today. Given its generous use of equity-based compensation in past years, people familiar with Facebook say that even by conservative estimates there are likely to be well over a thousand people looking at million-dollar-plus paydays after the company goes public.

Facebook faces hurdles, to be sure. Increased competition from Google+ and Twitter is likely forcing the IPO moment. Plus, the government and vocal minority will not stop pressing Facebook on privacy issues, and I do believe that growth in its home market has slowed a bit. Over the years, many companies transform when they go public. Microsoft’s IPO in the mid of 1980’s not only helped create a bunch of young millionaires, it also helped in turning windows from a disappointing also-ran into the world’s dominant operating system. The eminent flood of Facebook dollars is sure to provide a welcome boost to local businesses in Silicon Valley, from high-end car dealerships to wine merchants. This IPO would provide funds to helps Facebook maintain its expansion and fend off competition from internet rivals such as Google and Twitter.

(Source: WSJ, Stratibune and businessinsider)

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