Facebook has filed for an initial public offering (IPO) in the United States. The Palo Alto-based company hopes to raise $5 billion worth of funding from the sale, according to its filing with the Securities and Exchange Commission.
The world’s largest social network turned $1 billion over in profit last year, from $3.71 billion in revenues, according to a report in the Wall Street Journal. The report claimed that Facebook hopes to raise as much as $10 billion when it begins selling shares.
Mark Zuckerberg, founder, and CEO of Facebook was revealed to have a 28% stake in Facebook, and an annual base salary paid to him by the company of $500,000 (before bonuses). The enigmatic Zuckerberg has requested to have this salary cut to $1 per year, effective January 1, 2013, which was approved by the board.
Facebook claims to have 845 million active users that are posting 2.7 billion ‘likes and comments and 250 million photos every day.
A couple of hours after the filing, Zuckerberg posted a photo of his desk with a ‘stay focused & keep shipping’ poster next to his laptop.
Jan Dawson, the chief telecoms analyst at Ovum, pointed out in a statement that the IPO was inevitable ever since the company breached the 500 shareholder number, which triggers additional reporting requirements.
“As a result, the company has shared many financial details not previously disclosed, which make for interesting reading,” he wrote.
“On the two most important metrics – revenue growth and profitability – the company is doing very well,” continued Dawson.”Revenue has grown very strongly for the last two years, and with it operating income.”
Dawson warned that Facebook operates in a similar vein to Google, with the vast majority of its revenue coming from advertising. He believes this puts it at risk to the fortunes of the overall advertising market and from major moves from Google in particular.
“As Google seeks to ramp up Google+, it will eat into Facebook’s share of the social networking market and with it Facebook’s share of related advertising,” he added.
“In addition, since much of Facebook’s revenue comes from gaming apps, as Google expands the gaming platform it is building with Google+, it threatens to dilute Facebook’s relationships with Zynga, which accounts for 12% of its revenue, and other major partners,” he continued.
The New York-based analyst found it ironic that mobile advertising, which he points out is one of Google’s fastest-growing opportunities, is non-existent for Facebook at present.
“This represents both an opportunity and a threat for Facebook,” explained Dawson.
“Despite all this, though, Facebook is if anything increasingly dominant in the social networking space, and Google still has a steep hill to climb if it is to truly have a competitive impact with Google+.”