5 facts you should know about the Facebook IPO

Well, it was announced this week that Facebook has filed its preliminary prospectus in order to go public.

In filing their prospectus, I discovered some startling facts you should know about the #1 social networking website.

Facebook is going to try and raise $5 billion with this IPO.

This is interesting because at the end of December 2011, the company had $3.9 billion in cash. The main reason of this IPO is to give a return to their early investors.

Facebook is used everyday (more than you think).

Look at their numbers.

Their users upload 250 million photos each day! Their are over 100 billion friendships and over 845 million monthly active users.

These are numbers that are the envy of any social networking website. I can verify that Facebook is a heavy referrer of traffic and as a user it is a sticky website (means users spend hours not minutes).

Facebook creates value for advertisers and users

Facebook users do not care if they are being marketed to or shown targeted advertisements based on their profile. Facebook is a free service that lets users  connect with their friends.

A Facebook user can share and publish their opinions, ideas, photos, and activities.

How it creates value for advertisers is that it provides reach and  relevance.

[quote]What other option can you reach a vast consumer audience of over 800 million users and have the option to show the ad to a subset of users based on demographics?[/quote]

They understand the importance of their strong personnel

In their IPO they identify as one of their threats, as the loss of any key personnel.

[box type=”note”]The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future,could harm our business.[/box]

They identify Mark Zuckerberg and Sheryl K.Sandberg in the IPO and understand that their product needs to have great people in engineering, product development, marketing, and sales personnel.

They identified virtual payments as a Market Opportunity

When I read that they looked at payment for virtual goods, it makes me wonder if they are creating their own Paypal system for their users to send/receive payments.

The worldwide revenue generated from the sale of virtual goods increased from $2 billion in 2007 to $7 billion in2010, and is forecasted to increase to $15 billion by 2014.
According to their IPO,
[quote]Payments integration is currently required in apps on Facebook that are categorized as games, and we may seek to extend the use of Payments to other types of apps in the future. [/quote]
I see Facebook creating an environment or API to take payments for virtual games (not just on the Facebook platform).

4 thoughts on “5 facts you should know about the Facebook IPO”

  1. Things you Tshould know about ipos: Institutional investors get the ipo price, not you. Valuation for a company is deby the free market, not some accounant. The moneymakers on every ipo are the underwriters. Many stocks are currently trading less than their ipo price. With Facebook you’re buying Zuckerberg as he will continue to be the majority shareholder. Will Zuckerberg operate in shareholder’s interesthisthis own? Cheers!!Things you shou

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