Facebook files to raise $5 billion in historic IPO

The offering would be larger than Google's 2004 IPO. The company has 845 million users and generated nearly $4 billion in revenue in 2011. The offering is expected to be completed in May.

By Charley Blaine Feb 1, 2012 1:28PM
Updated: 11 p.m. ET

Social-networking site Facebook filed for its long-awaited initial public offering today.

The company said it wants to raise $5 billion -- and probably more -- in common shares in the offering.  The offering statement confirms that CEO Mark Zuckerberg, who turns 28 in May, is one of the nation's richest people already. His 28% stake in the company was valued at $15.9 billion at the end of 2011. If Facebook generates a valuation of $100 billion, the value of his holdings could jump to $28 billion.

Facebook, incorporated in 2004, had $3.7 billion in revenue in 2011 and $1 billion in net income. It says it has 845 million active users, who upload 250 million photographs a day and log 2.7 billion likes and dislikes every day. The users have 100 billion friendships.

Facebook's IPO is the most eagerly awaited since Google (GOOG) went public in a $1.67 billion IPO in 2004. The interest in the IPO was so great that it crashed the Securities and Exchange Commission's website late today.

Eighty-five percent of Facebook's revenue in 2011 came from advertising. That's down from 98% in 2009 and 95% in 2010. The rest of the revenue comes from payments derived from virtual goods used in social games.

Article continues below.
The company's 2011 revenue was an increase of 88% over 2010's revenue of $1.97 billion. 2011's $1 billion in net income was a 65% increase from 2010's $606 million. The 2010 profit was up 164.6% from 2009.

About 44.3% of Facebook's revenue in 2011 camefrom outside the United States, up from 33% in 2009 and 38% in 2011.

Advertising accounted for about $3.15 billion of the company's ad revenue. Ads delivered grew 42% in 2011 over 2010. In addition, revenue per ad increased about 18%.

Fees generated by game develper Zynga (ZYNG) were responsible for about 11% of Facebook's revenue.

It gets a growing portion of its traffic from mobile devices. That business does not as yet generate much revenue. A challenge, the form S-1 statement says, is to find ways to generate revenue from the mobile traffic.

Facebook was started by Zuckerberg and a number of fellow Harvard students.

After Zuckerberg graduated, he started to build the operation into a for-profit venture. He was staked in part by his father, who was later awarded 2 million shares for his help.

in a letter from Zuckerberg that was part of today's filing, he insisted the profit was not the driving force. Facebook was "built to accomplish a social mission -- to make the world more open and connected."

Facebook has offices or data centers in more than 20 countries. It operates in Europe, Latin America and parts of Asia -- but not China.

Its competitors include Google, Twitter and Microsoft (MSFT), which already is an investor in the company. (Microsoft is the publisher of MSN Money.) 

Zuckerberg will still control the company
The offering will be Class A common shares, which come with 1 vote per share. The company's Class B shares get 10 votes each. Zuckerberg owns about 28% of the Class B shares and has effective control of the company, the statement says.

The offering statement filed with the SEC does not specify the number of shares to be offered or the price. The $5 billion amount is a placeholder used to calculate fees and may change.

But the number is, in fact, smaller than the $10 billion that was expected as late as last week.

The smaller deal size reflects a decision to start with a conservative base and gauge demand for the shares before deciding whether to increase the size of the offering and by how much, International Financing Review said Wednesday.

The filing timetable appears to establish a framework for Facebook to finalize the IPO process by May, pending a smooth registration process with the SEC. One reason to get the offering done by May, according to CNBC's Julia Boorstin: It lets insiders, normally not allowed to sell shares before six months, sell by the end of the year, before capital gains rates rise.

The networking site has opted to hire five lead investment banks, known as bookrunners, to handle the offering, featuring Morgan Stanley in the coveted lead role.

Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JPMorgan and Allen & Co., the boutique investment bank that specializes in media deals, round out the initial list of bookrunners on the deal. IFR said the could also grow.

Investment banks commit to buy the shares and market them to prospective investors.

Recent trading in Facebook stock on private exchanges has pointed to an $80 billion-plus valuation, IFR said. The value of all class B shares on Dec. 31 was about $52.3 billion.

Facebook’s biggest outside stakeholder is venture firm Accel Partners, which first led a $12.7 million investment in 2005. Other investors include Microsoft and PayPal co-founder Peter Thiel as well as Greylock Partners.

As the site’s popularity grew, banks, hedge funds and mutual fund companies started buying stock. In January 2011, Facebook said it raised $1.5 billion in a financing round led by Goldman Sachs that valued the company at $50 billion.

Goldman Sachs, funds managed by the firm, and Digital Sky Technologies bought $500 million of stock, while Goldman Sachs offered $1 billion of shares to non-U.S. clients.

More about Facebook on MSN Money:


Largest IPO ever? Not nearly


Social-networking IPOs have been weak so far


To teens, Facebook is already over


Facebook's intriguing 'status update'


Feb 1, 2012 7:25PM
NO TIMELINE!  When my account switches to timeline I'll kiss Facebook goodbye. I believe many of my friends will too.

Facebook -- Listen to your users and make timeline Optional.

Feb 1, 2012 4:12PM

Wake up everyone, here's the deal you can read and start to think how to compete against Facebook now that it will be obligated by coorporate greed. So if you are sick of facebook start to think how to develope another social media that can listen to what the people want? Now you will be on your way to millions $$$ and Facebook will be your Marketing Manager. BRING ON THE COMPETION......

Feb 1, 2012 9:14PM
I'm not a Facebook user, and I have no plans to invest in this IPO.  Remember the ".com" disaster eleven years ago?  I remember reading that the .com era was "the new economy."  Well, it sure was!  Hahaha!  This stock is too risky for me, but good luck to the other investors.
Feb 1, 2012 9:00PM

Dang fine idea...Heard the ticker symbol was going to be ZUKR.

Feb 1, 2012 7:28PM

F.ACE.BOOK???  As the name tells, wants to bring down and destroy our real Industry with a fake so called "soft dollars".  Do everytihng you can and stop using the F.ACE.BOOK!!!

F.ACE.BOOK = The FACE of EVIL!!!!! 

Feb 1, 2012 8:15PM
Facebook has the potential to be positive. It has many loopholes of security. People that use facebook have their information misused by companies, entities for reasons other than "Social networking"  The word "Social" kind of frightens me because it is so heavily related to "Socialism" 
If Facebook went back to being a more friendly user interface and made certain it was used in the best interest for the actual users rather than the people who spend money on advertising then it would continue to prosper. I do see a day when facebook will come to an end just as newsprint media is doing as we speak. Many people are afraid of changes and when they get to know something they tend to stick with it. The timeline is more "Socialistic" than one could dream of. As for the number of people using it, I know many people that have hundreds of accounts, so the actual number of users will never be known. However, if FB listens to the users rather than the advertisers, investors, bankers and the Corporate America it will always have a chance to be successful. FB needs to realize it wasn't the investors that made FB what it is today, it was the actual users. The users simply liked the ability to connect with old friends in a safe secure non shared environment in which they felt safe sharing text, data, photos and videos with friends. It has grown into a monster and as with any large company it has its flaws and its good points. If I owned Facebook, I would keep it a private company and keep total control while offering a Venture capital fund for Entrepreneurs who wish to attain some success with a start up company. This would put money back into local communities, create jobs locally and gain a much larger fan base for trust. 
I know many people who use FB but have no trust in their security and what the over all plan with FB is. 
Moral to the story is, if you want to look good, don't post anything on FB that you wouldn't post on a billboard outside of your mothers house next to the school or workplace you attend. Plan on everything being on the 6 o'clock news. If you post it, it will NEVER go away.
Remember the days of privacy when we did not have cell phones, internet, digital TV, google maps and spying satellites? Where have all the good times gone? Remember kids, it's the Internet.
Feb 1, 2012 7:25PM

fACEBOOK worth $100,000,000,000.oo US Dollars?  ZuckerBERG???  Some of the "*BERG" names scare me - like the "IceBERG"...   They seem to bring disasters around like in the Titanic movie.... 

LET'S BE REAL FOR GOD'S SAKE:  Facebook is worthless and it only stimulates FART Production of the jobless / unemployed  people  that have lost their real jobs!!!!

FACEBOOK should be banned from doing online business as it motivates people to waste unneccesary time online and lose their jobs!!!!

Feb 1, 2012 7:26PM

This is like holding out a sucker to a child but then I have a real low opinion of Facebook to start with.  Will not use it, will not do business with anyone trying to force me to use it and therefore will not be buying any stock.  Problem is not sure how I can keep shares out of my 401k investment.   Zuckerberg should be spelled with an S because there sure are a lot of them connected to Facebook.

Feb 1, 2012 7:14PM
Funny how $5 billion sounds like such a modest number these days, compared to real market movers like corporate bailouts, sovereign debt restructuring, government deficits, quantitative easing by the Fed, etc., etc. I don't know why the U.S. Treasury doesn't just write Zuckerberg a check for five big ones and get it over with. I'm sure we're all  going to end up paying for Facebook eventually, one way or another.
Feb 2, 2012 1:12AM

WARNING TO ALL!!  Facebook is a scam and will leave a lot of dissapointed investors in red!!!

These are times when even MicroSoft is downsizing and they do have some products outthere.

How can an idiot like Mark Z_Berg make his company grow from 8 to 100 Billions in a few years when every other companies were colapsing???

Again, WARNING!!!  FACEBOOK is a SCAM and the F.B.I. should investigate it!!!!

Feb 2, 2012 3:37AM
Tonight I was watching the news out of the bay area, and they said at least 1000 Facebook employees will become millionaires...& are already out shopping for fancy cars, homes & furniture.   What REALLY ticked me off though.....was the end of the story.  California politicians all excited at the expected increase in tax revenue for the state.   In other words....they're not even waiting to see what happens.   Instead of SAVING any money....these politicians are licking their chops.......and ready to start squandering the funds.  
Feb 1, 2012 7:41PM
All of you haters are just jealous that you didn't think of the idea first.  I never have, and never will, use that time wasting, useless, brainless piece of junk.
Feb 1, 2012 7:27PM
Zukerbery has a lock on power - why would anyone buy into that?  He makes all the decisions - including where all the profits go - anyone think that will go to investors?  Investors will swell his coffers by millions and get pennies back.
Feb 2, 2012 12:35AM
Yum...time to reopen a brokerage account, and SHORT the hell out of it.
Feb 1, 2012 7:56PM
Ended the day up 83 points, not bad at all however, we were up 150 and in triple digits most of the day; things people don't notice...At approximately 1515 hrs scumbags started doing their thing, another 30 minutes of trading and who knows what would a happened. These manipulators will never ever go away, we know it down here and everybody needs to know it. Will they continue their selling in the morning? Guess we will see.
Feb 2, 2012 3:50AM
i love face book  i found all my childhood friends...i found sisters i didn't know i had and found my dad after 33 years.   i made money through face book and i chat with my mom who lives a thousand miles away. i am a photographer. i post my pictures for all my friends to see. It is important to keep in touch with  my family and  people who really are my friends.  i even have face book friends that in real life are not my friends just to show them how big I am being despite difference of opinion.  i have had deep philosophical discussions on my wall. also i joined a group of concerned parents coming together to keep children safe.  i could go on with many other great things to praise about  this  awesome site known as face book  good going mark
Feb 2, 2012 12:53AM

FARTBOOK worth 100 bullion?  Only because the last name is Z-BERG (just lhe in the IceBERG that hit Titanic) If the owner's name would be ANDERSON, MORRIS OR JOHNSON, the F-Book would be worthless...

As soon as mR Z-BERG gets his hands on the 5 Billion US Dollars he will move to Switzerland and file for BANKRUPTCY!!!

Thant is why the name was F-BOOK....


Feb 2, 2012 12:45AM
By the way is this Zug whatever Jewish, if yes just get educated about the jewish people
Feb 2, 2012 1:21PM

We have been pretty much flat since the Fed started speaking....At 1215 hrs scumbags got bored we guess and started doing their thing...Why? Because they can....More later.

Feb 2, 2012 11:02AM

We opened up a little bit but we don't see it lasting; too many of these manipulators and we are sure they don't want a repeat of yesterday...Flat is good actually...We will hear what the Fed says, although you know they will find any excuse to do their thing...As always...Oh well. We will see.

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