Facebook files for IPO, reveals monster profits

You’ve probably heard about this by now, because it’s all over the news: Facebook has filed for its initial public offering. What you may not know are the numbers, and I feel compelled to point them out.

According to Forbes, Facebook had net income of $1 billion on revenue of $3.71 billion for 2011, up from $606 million net income and $1.97 billion revenue for the year before. Yes, the company’s profits account for more than a quarter of its revenue. Google has a similar earnings-to-profits ratio, although its figures are an order of magnitude higher: $9.7 billion net income on $37.9 billion revenue for 2011.

Other facts of note: Facebook has $3.91 billion in cash. Its user base amounted to 845 million "monthly active users" as of December 31, which reportedly represents a 39% increase over usage stats from a year before.

Reuters notes that Facebook is looking to sell about $5 billion worth of shares in an IPO "expected to be Silicon Valley’s largest ever." Amazingly, however, co-founder Mark Zuckerberg will retain "almost complete control" over the company. He’ll own a whopping 56.9% of voting shares.

Considering how Zuckerberg has steered Facebook from a dorm-room project into a multi-billion-dollar business, I doubt anyone would want it any other way.

Comments closed
    • titan
    • 8 years ago

    Are there any notes as to when the shares will be available?

    • indeego
    • 8 years ago

    [url=http://www.msnbc.msn.com/id/46234749/ns/business-us_business/<]Facebook Artist will be worth 200 million.[/url<]

      • BobbinThreadbare
      • 8 years ago

      Sucks to be Eduardo.

      • d0g_p00p
      • 8 years ago

      There is expected to be 1000 new millionaires when the FB IPO hits. Good to see David Choe took stock unlike the Apple dude who did the logo.

    • indeego
    • 8 years ago

    [quote<]"Considering how Zuckerberg has steered Facebook from a dorm-room project into a multi-billion-dollar business, I doubt anyone would want it any other way."[/quote<] Said the same thing about Jerry Yang, co-founder of Yahoo... But yeah, in this case it sounds like Zuckerberg has his heart and soul into this company more than most.

      • floodo1
      • 8 years ago

      Indeed!
      Facebook had better not get addicted to it’s current revenue stream otherwise it’s going to go the way Myspace went….if Facebook keeps heading down the road of eroding people’s privacy to make a buck then they’re doomed. Unlike the true tech giants I don’t really see what makes Facebook oh so unique, beyond the fact that it has a critical mass and momentum right now. Surely there will be a better evolution of the so-called ‘social media’ that wont’ be headed by Facebook.

      I think it’s indicative of the larger context of people giving up their rights slowly and steadily, and it will culminate with a backlash when people realize how far it has gone……same old tired story….. 🙂

      • designerfx
      • 8 years ago

      no, Zuckerberg has everyone else’s heart & soul in the company.

      get it right.

      Jerry Yang tried to protect yahoo from microsoft and got canned for it, due to yahoo’s board being greedy.

      None of these things have anything in common.

    • TurtlePerson2
    • 8 years ago

    Why are they having this IPO? They have ~$4 billion on hand, what will the other $5 billion do for them?

    My guess is that some of the investors just want to cash out, and it has become very difficult to do that with the company being private.

      • dpaus
      • 8 years ago

      ^^ This. Referred to in the industry as ‘IPFlow-through’ (i.e., tons of money comes in the front door from new shareholders, and goes right out the back door to founders and vulture capitalists)

      • Anarchist
      • 8 years ago

      They have to do the IPO so the investors can cash out and investment banks can make money. Furthermore what better time to do it than now when global central banks are literally throwing piles of money at anything that moves (given that the thing that moves is from the financial sector).

      • UberGerbil
      • 8 years ago

      There’s a limit to how many investors you can have and still remain a private company; if you’re handing out stock to your employees, eventually you have enough shareholders that you pass the threshold at which the SEC considers you to be a public company with all the reporting and governance rules that go along with it. If you’re going to reach that point anyway, you might as well do a proper IPO (this was actually one of the key reasons Microsoft went public when it did in ’86).

      And yes, the early investors — venture capitalists and otherwise — expect to cash out at some point so they can take their profits and move on to investing in the next round of start-ups. That’s how it works.

    • Peldor
    • 8 years ago

    Impressive numbers for both 2010 and 2011. So much for the pundits saying Facebook wasn’t making any real money.

      • wobbles-grogan
      • 8 years ago

      Its still WAY over valued. Theres no way it can be worth $50 billion (or some other such absurdly large number!)

      Edit:
      Or, wait, i obviously dont understand shares 🙂 If he sold 5 billion dollars of shares, and still owns 56.9% of the company, does that mean that 5 billion = 43.1%, and therefore the company is worth ~11 billion?

        • derFunkenstein
        • 8 years ago

        yeah, i believe your edit makes sense.

        • Helmore
        • 8 years ago

        He doesn’t own 56.9% of the shares, he owns 56.9% of voting shares. Zuckerberg has 28.4% of total shares. And yes, for some reason this endeavor to raise 5 billion in cash means that Facebook values itself at somewhere north of 50 billion.

          • wobbles-grogan
          • 8 years ago

          Could you explain this? Owning 28% of total shares yet having 57% voting share? Is there ‘seperate’ share categories or some such?

            • khands
            • 8 years ago

            Common stock vs. Preferred, and strangely Preferred stock can’t vote (generally).

            • SubSeven
            • 8 years ago

            I dont think this is preferred stock (I may be wrong as this can be some uniquely structured preferred stock). Preferred stock is like you said, typically non-voting stock that entitles you to get money back before common shareholders should the company go under.

            • SubSeven
            • 8 years ago

            When a company files for IPO, it has the ability to structure the IPO in any way that suits its purposes. For example, a company can issue 2 classes (or more) of shares: an X number of non-voting shares (that people can purchase on the open market) and an X number of voting shares that will be held strictly by owners/insiders. The non-voting shares entitle buyers to “share” in the profits of the company and realize any capital gains (or losses) as the price of the stock appreciates. The voting shares entitle a person to vote on whatever issues that arise during the course of business (acquisitions, spin-offs, strategic decisions, etc). Typically owners will command both types of shares. In this case, the reason Mark Z. doesnt have 100% of the voting shares is due to the fact there are other part owners. Hope this helps.

            • wobbles-grogan
            • 8 years ago

            It does! Cheers!

            • stupido
            • 8 years ago

            Thanks from my side too!

        • DreadCthulhu
        • 8 years ago

        ~$11 billion would be the starting worth, but given those profit numbers, and the amount of cash they have on hand, I that is easily a fair number. Checking Microsoft, Apple, Google, Ebay, Yahoo, ect, they all have price to earning ratios ranging from about 10 to 20. So if Facebook is treated by investors the same way, they will end up with a market cap of $10 billion to $20 billion, or so.

          • sweatshopking
          • 8 years ago

          or WAY more. try 82.2 billion.
          [url<]http://vator.tv/news/2011-09-28-facebook-market-cap-hovering-around-822-billion[/url<]

          • nanoflower
          • 8 years ago

          Currently valued at about $31 a share according to CNBC which gets Facebook up to $100 billion. Though it may not actually be at that value by the actual time of the IPO depending on what happens to the share price when the IPO actually happens

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