Facebook is poised to announced its intention to float on the stock exchange and in turn it will see its founder Mark Zuckerberg pocket upwards of 16 billion dollars for his shares.
The 27-year-old’s social networking website is expected to file the necessary papers as early as tomorrow in order to list the company on the US stock market in the spring.
The company would then be valued at between £48 billion to £64 billion making the founder a mulit-billionaire through the shares he owns. James Montgomery, head of US investment bank Montgomery & Co, said: “The float will be iconic.”
It’s a true story of the American dream for a Zuckerberg, who started the social network in his dorm at Harvard University in 2004. Originally created for students the site took off worldwide and now has 800 million users. The typical member has 130 “friends”. A staggering 250 million photos are uploaded every day. Facebook is thought to have made £640million last year mainly through advertising.
So what does Facebook have planned with its newly found fortune? Well, they are about to move to Silicon Valley’s number one address: 1 Hacker Way.
From humble beginnings in Harvard dorm room, to a rented house in Palo Alto to a series of temporary corporate offices, which it has quickly outgrown. The 8-year-old social networking giant is set to lay down permanent roots just in time for its public offering.
Facebook is the talk of the town in Silicon Valley as its the biggest company set up shop in since Google Inc. Located just south of San Francisco the nine-building complex has room for up to 3,600 employees, with the opportunity to increase the site to accommodate 6,600 subject to approval from Menlo Park.
The social network also bought a 22-acre site for a second campus, which is on the other side of the divided highway that can be reached through an underground crossing that is big enough for car to travel through. Facebook will install a people mover in the crossing to ferry its staffers back and forth to the new campus that it hopes to have ready by 2014. The two campuses will give Facebook room for as many as 9,400 employees.
It’s all part of a grand plan Zuckerberg has to create an urban oasis for all its Silicon staffers, and to put one over on its chief rival Google who are waging a war for the services of top engineers and executives.
Not everyone is convinced, though.
But not everyone is convinced by the sale of Facebook. “There’s way too much hype,” states Peter Leeds, penny stocks analyst and the leading speaker on speculative investments. “We’ve seen it before with blue chips and penny stocks alike – the over-priced, over-hyped IPOs get driven up in price at first, only to come crashing back to earth a few days later.”
“It’s a great company with a lot of value, but not as much as they’re hoping to get. Then with rampant, albeit ill informed demand post-IPO, the shares will be highly over priced. You’ll see exactly what I mean in March when Facebook has to release their financial reports, IPO or not.”
Leeds also suggests that investors trying to be a part of this IPO will end up losing money, as the hype fades away, and the Facebook shares come back down to earth. He also believes that Facebook activity levels are starting to decline, based on the analysis of his penny stocks team.
A bright future in social advertising.
Facebook‘s share of U.S. display ad impressions grew to 27.9 percent during 2011, according to comScore data revealed on Monday. It’s a sizable lift; the Reston, VA-based researcher estimated Facebook’s 2010 share of display ads at 21 percent.
Yahoo’s currently second with 11 percent of the market, comScore says, while Microsoft, Google, and AOL trail with less than 5 percent apiece. ComScore has placed Facebook No. 1 in the display ad impressions category since 2009.
As Facebook has grown to more than 800 million users worldwide, brands have gotten on board with vigor. The Menlo Park, CA-based digital giant has successfully courted Madison Avenue during the last two years in particular.
“Any time a site becomes so influential to the full digital landscape, advertisers are forced to pay attention,” comScore rep Andrew Lipsman told ClickZ News. “There was a time when brands thought of Facebook as a place for kids and teenagers. That’s obviously not the case anymore.”
At the time of writing: Facebook is expected to file for its first IPO (initial public offering) on Wednesday, with the company expected to raise less than previously expected - 5 billion – according to a new report.
According to International Financing Review, who are quoting sources close to the deal, the social networking site is planning to raise around half of what was previously expected.
Facebook is expected to start with a conservative base before deciding whether to increase. From there, the company will sell shares from May onwards with Morgan Stanley leading the effort – although Goldman Sachs, Bank of America, Merrill Lynch, Barclays Capital and JP Morgan are also included on the list.