Facebook has plans to file its initial public offering sometime this week. With mounting anticipation, it is speculated that this may be one of the greatest debuts of a US company in the IPO market.
Viewed as a great opportunity for the most recent Web investment boom, this deal has the potential to raise nearly $10 billion. It would create a value on the social networking site between $75 billion and $100 billion. And the $75 billion is a low ball that is highly unexpected.
The website, filled with nearly 800 million users from around the globe, has changed the way that the modern world communicates with one another. It has enabled people to do everything from share the most recent pictures of the family vacation, to organize extreme protests around the world.
Morgan Stanley has been chosen to lead the deal for Facebook. Being chosen from among the many other Wall Street banks desiring for the lead role in this deal is… Well, a big deal. Many banks are struggling financially, and this deal has the possibility of profiting tens of millions of dollars in banker fees, not to mention the possibility of new business and, of course, bragging rights.
If Facebook gains the $10 billion offering, it would rank it as fourth largest IPO in the US, following Visa Inc, General Motors Co., and AT&T Wireless. Additionally, it will make Facebook the largest US Internet offering of all time, beating out even Google Inc., which only raised $1.9 billion.
If it ends up with a $100 billion valuation, Facebook’s worth would equal all of McDonald’s Corp. and half of Google Inc. combined.
Facebook gains revenue through its advertisements. Big brands have rushed to the site to advertise and interact with customers. They do this through fan pages and display ads. According to eMarketer, a research firm, Facebook had a $3.8 billion revenue in 2011, compared to a $738 million in 2009.
The IPO will create a brand new generation of Silicon Valley millionaires. A thing that has not happened since Google’s offering in 2004.
Chief Executive Mark Zuckerberg, 27, will be tested by the new IPO. It will quickly be seen whether he can handle aglobal company, and the criticism rolling in every three months by invested investors. He has been reluctant to go forward with the IPO, believing that it will change the culture of the website and company. Yet, he knows that he must move forward, because with over 500 shareholders, he must start publicly reporting financial information.