Facebook IPO Launched – Seeks to Raise $5 Billion in Initial Funding

Friday, February 3rd, 2012 at 12:25 pm , filed under Weekend Column by Dave Martin

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Well, this week’s weekend Column has been Chosen for the Social Network giant: Facebook. As this week there was nothing new in the tech world other than earning reports, leaked press shots of phones, tablets, gadgets and so on.

Not even an official release on phone or tablets were revealed – In those scenarios Facebook has launched its IPO, which is something unique and the hot cake in the web and that’s the reason we have chosen Facebook IPO as this week’s weekend column.

Facebook has officially signed its Initial Public Offering, authorized by Ernst & Young LLP as having shares of its common stock available to the world.

The social network giant seeks to raise $5 billion in initial funding; merely about half of what analysts were projecting on the whole. In the filing, it’s clear that Facebook’s present cash, cash equivalents, and marketable securities totals in at $3,908,000,000 – which is really mind blowing. On the other hand, alike numbers can be seen in working capital at $3,705,000,000 and 4,899,000,000 for total stockholder’s equity, while the Total assets hits at over 6 billion USD.

As Facebook prepares to go public, certainly the Social Network will be the largest Internet IPO ever. Though shares won’t commence trading for months, the IPO may possibly strike as much as $10 billion and value of Facebook up to $100 billion. Facebook’s current free cash flow sat at 470 million USD in 2011.

According to Facebook IPO filing, in 2011, the Social Network recorded revenue of $3.7 billion, operating income of $1.75 billion, and net income of $1 billion. Whereas the Facebook’s S-1 filing does not list how much shares will cost upon the date of the IPO, Facebook’s most recent estimate as of December 31 puts the per share price at $29.73.

Facebook has over 845 million members global. Over a period of 8 years the Social network had extraordinary access to capital, and on sites like SharesPost and SecondMarket, pre-IPO prospectors have been able to buy and trade shares in the company from employees and other early stakeholders. Facebook’s relative maturity indicates that most of the millions or billions that may perhaps be made from purchasing public shares have most likely already been made.

Despite the consequences, the IPO will kick off with cash in the pockets of many paper millionaires surrounding Facebook, and this will result into a huge amount of capital into the Company’s treasury. This capital will let Facebook to invest more in its products and raise its revenue streams.

This indicates that Facebook’s IPO will meet destiny alike to that of this year’s other high-profile tech IPOs. On the other hand, fine-tuning its ads is vital, given that it’s the company’s major revenue stream – Currently, advertising accounts for 84 percent of Facebook’s $3.7 billion in revenues.

Finally, when Facebook is traded on public markets, the social network giant must be more transparent and more frequently reveal its finances and activities.

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