Facebook to raise $5 billion in landmark initial public offering
NEW YORK - The Associated PressInternet social network Facebook is going public in a stock offering that could value it at up to $100 billion, eight years after its CEO Mark Zuckerberg started the service at Harvard University.
The much-anticipated status update means anyone with some cash will be able to own part of a Silicon Valley icon that quickly transformed from dorm-room startup to cultural touchstone. If its initial public offering (IPO) of stock makes enough friends among investors, Facebook will probably make its stock market debut in three or four months as one of the world’s most valuable companies.
Facebook hopes to list its stock under the ticker symbol, “FB,” on the New York Stock Exchange or Nasdaq Stock Market. In its regulatory filing Wednesday with the Securities and Exchange Commission, Facebook indicated it hopes to raise $5 billion by selling a small percentage of its shares to the public in its IPO. That would be the most for an Internet IPO.
The final amount will likely change as Facebook’s bankers gauge the investor demand. Joining corporate America’s elite would give Facebook financial clout as it tries to make its service even more pervasive and expand its global audience of 845 million users.
The intrigue surrounding Facebook’s IPO has increased in recent months and not just because the company has become a common conduit for everyone from doting grandmas to sassy teenagers to share information about their lives. Zuckerberg, 27, has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds. In Zuckerberg’s case, a lawsuit alleging that he stole the idea for Facebook from some Harvard classmates became the grist for a book and a movie that won three Academy Awards last year.
Zuckerberg to retain firm control
Following the model of Google co-founders Larry Page and Sergey Brin, Zuckerberg set up two classes of stock that will ensure he retains control. He will have the final say on how nearly 57 percent of Facebook’s stock votes.
Even before the IPO was filed, Zuckerberg was shaping up as his generation’s Bill Gates - a geek who parlayed his love of computers into fame and fortune. Forbes magazine estimated Zuckerberg’s wealth at $17.5 billion. A more precise measurement of Zuckerberg’s fortune will be available once the IPO is priced.
The IPO filing casts a spotlight on some of Facebook’s inner workings. Among other things, the documents reveal the amount of Facebook’s revenue and its major shareholders. The company earned $668 million on revenue of $3.7 billion last year, according to the filing.
“The company is a lot more profitable than we thought,” said Kathleen Smith, principal of IPO investment advisory firm Renaissance Capital. Although she considered Facebook’s numbers “very impressive,” she said Facebook needs to talk more about where it sees its growth coming from.
What’s not in the documents, yet, is Facebook’s market value. That figure could hit $100 billion, based on Facebook’s private valuations and the expectation that it will continue to grow at a rapid pace.