Social-networking behemoth Facebook filed for its initial public offering on Wednesday, February 1, the first step in publicly trading as ticker “FB” on, as yet, an undisclosed exchange. The Wall Street firms underwriting the I.P.O. are Allen & Company, Bank of America-Merrill-Lynch, Barclays Capital, Goldman Sachs, JP Morgan Chase and Morgan Stanley.
With more than 845 million users around the globe, the company seeks to raise $5 billion for its rollout. However, Facebook is rumored to be aiming for a much higher valuation, $75 billion to $100 billion, outstripping older established American companies such as Ford Motor and Goldman Sachs.
The company recorded revenue of $3.7 billion in 2011, an 88 percent increase over fiscal 2010, posting a profit of $1 billion. This is miniscule in comparison to Google’s $37.9 billion 2011 revenue, but industry analysts anticipate advertisers’ funneling generous amounts of capital into the social mixing bowl. Much of the expected revenue growth will be generated by third-party businesses such as Zynga, which harvests more than 90 percent of its sales from Facebook-fostered Farmville and other games.
Facebook faces several significant challenges as it moves into the publicly traded arena, most of them deriving from its embarrassing wealth of data. The company has yet to find the best way to extract and leverage the most pertinent user information it has amassed, preserve its unique cultural flavor, boost per-user earnings, and still avoid falling afoul of regulatory bodies like the Federal Trade Commission over privacy issues.
Read more at The New York Times.
