Facebook Stock To Sell Publicly; Company Worth $100B

Dennis Faas's picture

For years, analysts have expected Facebook to become publicly traded. Now, the company confirms it will be offering at least $5 billion worth of shares, making the entire company worth as much as $100 billion.

It's not yet known when those shares will be made available, but Facebook has formally registered the move with the Securities and Exchange Commission. The $5 billion is a preliminary figure put forward to determine the registration fee the company must pay. 

The actual public offering may vary, depending on whether Facebook's financial advisors believe that setting a higher initial stock price will deter too many would-be buyers.

The deal is guaranteed to be an Internet record setter by a wide margin, easily beating out the $1.9 billion that Google raised when it went public.

Founder Mark Zuckerberg to Become Billionaire

How much Facebook will be worth on paper depends on how many shares it offers, the offering price, and how well that stock price holds up on the open market.

Most estimates suggest the company's market value will be in the $75 billion to $100 billion range, which would make Mark Zuckerberg worth nearly $30 billion (though of course if he ever tried to cash in too many shares, too rapidly, the stock price would fall dramatically).

He's more likely to realize spendable cash from his ongoing stock dividends. (Source: nytimes.com)

Amazingly, Zuckerberg says money isn't the motivation behind the move to take Facebook public. He told potential investors, "We don't build services to make money; we make money to build better services." He has previously indicated he's concerned going public could change the motivation of Facebook staff.

Even so, financial advisors may have persuaded him to go public now, while Facebook remains extremely popular with Internet users. (Source: wsj.com)

Facebook Earnings Rocket In 2011

In its filings, Facebook revealed its revenue almost doubled between 2010 and 2011, to $3.71 billion. More than 15 per cent of that came from commissions on sales of virtual goods, such as add-ons for social gaming applications like Farmville.

Facebook's annual profits also rose by 65 per cent to about $1 billion. Critics point out that is less than $1.20 per user, proving that user volume is the key to Facebook success, and explaining why many other social networking sites have failed to produce substantial revenue.

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