Our insane obsession and untreated addiction of a social regime, Facebook, has propelled it to an untouched pinnacle and just when you thought, ‘where to-from here’; the mastermind behind this huge social networking phenomena, Mark Zuckerberg announced its IPO offering for 2012. You wonder how big is ‘HUGE’? Then think about this, by the end of the year 2012, Facebook will have signed 1/10th of the human population!!! With a vast audience base of users, it shall gain control over 28% of the ads seen online and 1/6th of display-ad revenue in the US. Well another fact is 89% of Facebook’s revenue comes from advertising!!
As the date for Facebook’s Initial Public Offering (IPO) is drawing closer, investors predict that this is going to be the biggest IPO in the history of any tech company in general, and the largest Silicon Valley IPO ever, due to its broad-based interest. The pressure and speculation is simply overwhelming and distinctly catastrophic, and people are going giddy over their expectations and forecasts.
Facebook as a private firm, was easy to manage as the main goal was to impress and satisfy individuals. However its entrance in the public domain widens its goal, and now Facebook has to satisfy the interests of its investors too, for successful growth and trading.
One instance that piqued the investors was the absence of the CEO during the March Analysts’ Meeting where he carefully gave way to the COO, Sheryl Sandberg, and CFO David Ebersman to take the frontier. This act was conceived to be a little snobbish on the part of Mark who exhibits close and complete control over the biggest social networking site for the past 8 years!
The other setback is the disappointing first-quarter results which raised quite a few eyebrows of investors, who started questioning about the sustenance of the growth of this eight-year-old firm in the long run. Undoubtedly the IPO is set to raise around $5 billion against a total valuation of around $100 billion, which is even bigger than McDonald’s.
It’s not as perfect as it's exhibited! Along with the speed, growth, exhibitionism, sharing and connectivity, Facebook was also charged with allegations that it violated the users’ privacy! The result of which was, it had to put the case to rest with a 20- year settlement with the Federal Trade Commission recently.
However, going by the rumor mills which expect a record shattering amount to be raised during this IPO, we can break down the numbers to get a glimpse of the tip of the iceberg here.
Biggest US Internet IPOs figures:
Facebook – projected $10 billion
Google - $1.67 billion in Aug 2004
Groupon - $700 million in Nov 2004
Linkedin – $352.8 million in May 2011
Disney - $61 billion
Amazon - $88.3 billion
McDonald’s - $95.6 billion
Another interesting number is 900 million users
of Facebook. At this alarming growth and projected IPO growth, Mark will rake in $25 billion!
May 7th will mark the IPO roadshow wherein the management shall present its strategy to the prospective investors and it generally is carried out for about 1-2 weeks. This lays the foundation in forming a good image of the company, showing a projected growth using razzle-dazzle to justify the valuation, and if it goes well, then it might in turn result in trading of the stocks much, much earlier than its estimated date.
So get ready and fasten your seat belts as we take off to a new level altogether on May 18, 2012, when the IPO is scheduled to begin. The surprising factor would be the share price which is estimated to be anywhere from high $20 to mid- $30 range. The modest prices are perhaps to attract more investors.
At the end we all know two things are sure: 1. After IPO, Mark Zuckerberg is going to be an extremely rich guy 2. Facebook is really huge or is it Mark’s plan to showcase it as “HUGE”? Will have to wait and watch…