Okay, we've got a pretty good idea of what Facebook's IPO is going to look like now. Here's their latest
S-1 (amended) filed yesterday. This will take you to their
roadshow video trying to sell Facebook to investors.
Some of the important points:
They'll be offering about 337 million Class A shares at a price anticipated to be between $28 and $35. I'd guess the initial price ends up being closer to the high end of that range. 180 million of those shares are new issuance from Facebook (i.e. the proceeds from their sale go to Facebook), the rest of the offered shares are from existing stockholders. There's also an over-alloment option for about 51 million more shares - so a total of about 388 million shares could be sold at the IPO. By my calculations, that would represent about 14% of the ownership interest of the company. At the midpoint of the price range ($31.50), Facebook would raise about $5.6 Billion through this offering. If the shares price at the high end of the range and the extra shares are sold, Facebook should raise closer to $6.5 Billion.
A point I believe I made in another thread: Anyone considering investing in Facebook either at the IPO (if they have the opportunity) or thereafter should do so fully understanding one thing. Facebook will remain, speaking practically, Mark Zuckerberg's company. He will retain essentially complete control over important decision making. That will be true even though he does not (and will not) hold a majority of Facebook's ownership interest. This is because (1) he owns a lot of Class B shares (which are equal to Class A shares with regard to the ownership interest they represent, but which are entitled to 10 votes each rather than the 1 vote each that Class A shares are entitled to) and (2) he holds an irrevocable proxy regarding the voting rights of many other shares that belong to other people (mostly Class B, but some Class A). The result is that, after the IPO, Mr. Zuckerberg will still control about 57% of Facebook's voting power. Some investors might see that as a good thing, some might see it as a bad thing - but all would-be investors should be aware of it.
A few notes about the business' operations. As of the last quarter (March 31, 2012), Facebook reported 901 million monthly active users, 526 million daily active users, and 488 monthly active users that use mobile products (I think this last metric could end up being pretty important for a number of reasons, but I kinda wish they would report it for daily active users).
They reported $1.058 Billion in revenue for the 1st quarter of 2012, which is up from $731 Million for the year prior quarter. More than 80% of that was advertising revenue, the rest was from Facebook Payments (i.e. its system for making payments on the Facebook Platform - e.g., it keeps up to 30% of the money that people spend on Zynga games). Net income was $205 Million, down from $233 Million. The prospectus I linked at the top of the post has more details.
The high end of the anticipated price range would value Facebook at about $96 Billion. Anyone have thoughts? Is it a good (hopefully long-term) investment at that level?
I see a ton of upside potential for Facebook (e.g., I think one potentially big revenue stream could be location-triggered and/or time-dependent direct to mobile device advertising: e.g., based on your likes or those of your friends, an ad - or even a 10% off offer - might pop up on your mobile phone or tablet when you happen to be in the area of a particular restaurant at lunch time). But I also see a number of headwinds that just can't be ignored. I'm not sure where Facebook goes from here - it could become one of the most important and profitable companies in the world, or its relevance could slowly fade. It's going to depend on execution and the big picture decisions that Mr. Zuckerberg makes in the next few years. Do we trust him to make the right ones? It will be interesting to see what he does.
). A $38 share price would value Facebook at over $100 Billion. Shares are expected to start trading on Friday on Nasdaq under the ticker symbol FB.