Finally, the wait is over for investors. Facebook, the social networking giant, late Wednesday, filed for an initial public offering (IPO). The company plans to raise $5 billion in its much awaited IPO.
According to data from Dealogic, Facebook’s IPO will be the largest global IPO ever by an Internet-focused company. Google Inc.’s (NASDAQ: GOOG) IPO is currently the largest U.S. Internet IPO. Investors have been waiting for Facebook’s IPO for over a year now. Experts believe that the company could be valued between $75 billion and $100 billion.
Currently, Facebook has more than 800 million active users, with majority of those in the U.S. The company filed a 197-page prospectus with the U.S. Securities and Exchange Commission late Wednesday. The filing includes some interesting details on the company.
The filing confirms that Facebook is very profitable and is growing. Facebook’s revenue has risen from $777 million in 2009 to $3.7 billion last year. The company’s earnings have also grown at a strong pace in the same period. The company’s earnings have grown from $122 million in 2009 to $668 million last year.
Facebook also has significant cash on its balance sheet. The company ended 2011 with $3.9 billion in cash on hand.
But the big question investors are now asking is that can Facebook continue to grow at the same pace. Facebooks’s rise has been fueled by expansion of its users, which makes it a more attractive marketing vehicle for ads. Advertising revenue accounts for most of the company’s revenue at the moment.
Facebook generates nearly $4.39 in revenue per user, which according Tim Loughran of University of Notre Dame is a surprisingly low number. Google, which has annual revenue of approximately $38 billion, generates revenue of $30 per user of its services. This is certainly one are where Facebook can grow. According Loughran, Facebook needs to find more ways to get revenue from its users.
In the filing, Facebook said that its most promising expansion opportunities as Brazil, Germany, India, Japan, Russia and South Korea. The California-based company also hopes to make its service available in China.
The filing suggests that Mark Zuckerburg will sell an unspecified number of shares in the IPO to cover a tax bill for exercising a stock option to acquire 120 million shares. Zuckerburg currently owns 534 million shares in the company.
Facebook’s IPO follows a series of Internet-related IPOs last year, including that of LinkedIn Corp. (NYSE: LNKD) and Groupon Inc. (NASDAQ: GRPN)
