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Facebook bets big on IPO, seeks to raise $5 bn

Last updated on: February 2, 2012 14:23 IST

Facebook bets big on IPO, seeks to raise $5 bn

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Seema Hakhu Kachru in Houston

Seeking to raise $5 billion, social networking giant Facebook has filed for its long awaited initial public offering.

The IPO of the social network site, having over 800 million active users, is expected to be the biggest sale of shares by an internet company so far.

It filed the paperwork to go public on Wednesday.

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Image: Employees walk past the company logo at the new headquarters of Facebook in Menlo Park.
Photographs: Robert Galbraith/Reuters.

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Facebook's IPO would surpass rival Google's 2004 offerin of $1.9 billion. Earlier, Google held the record for the largest US Internet IPO.

For longtime followers of the social network, this is an exciting time and a culmination of the site's eight-year rise from Mark Zuckerberg's Harvard dorm room to world domination.

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Image: Facebook founder and CEO Mark Zuckerberg walks away after speaking to reporters.
Photographs: Brian Snyder/Reuters.
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Investment bank Morgan Stanley will act as lead underwriter, with Goldman Sachs and JP Morgan and others to take secondary positions.

Shares are expected to hit the market in May under the stock symbol "FB".

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Image: Facebook office.
Photographs: Robert Galbraith/Reuters.

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Facebook bets big on IPO, seeks to raise $5 bn

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The company is seeking to raise $5 billion, according to this early filing, amounting to a lofty (and still tentative) valuation of almost $100 billion.

Going public also provides a rare glimpse into the internal stats previously kept private. The service has 845 million active users, nearly half of which log in and actuate 2.7 billion likes and comments each day.

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Image: Facebook CEO Mark Zuckerberg speaks during a news conference.
Photographs: Norbert von der Groeben/Reuters.
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It also shed light on the company's prior revenue and earnings, with profits of $229 million and $606 million in 2009 and 2010, respectively- easily bested by a whopping$1 billion in 2011.

As for the Zuckerberg, his 2011 salary of $500,000 will be cut to $1 as of January 2013, but he'll be more than comfortable, thanks to a 28.4 per cent stake in thecompany.

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Image: US President Barack Obama attends a town hall meeting with CEO Mark Zuckerberg.
Photographs: Jim Young/Reuters.
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Meanwhile, Wall Street banks hope the IPO opens door to more work with the company down the line, and that work can mean more fees.

The Morgan Stanley brokers hope an IPO leads to handling money for some of those suddenly rich Facebook employees.



Image: People walk past the Facebook wall inside their office in New York.
Photographs: Eduardo Munoz/Reuters.

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