The social network giant Facebook has filed the papers for its long awaiting IPO or Initial Public Offering on Wednesday, (US time) with the Securities and Exchange Commission (SEC) in Washington. The IPO is expected to raise at least $5 Billion and begin selling its stock to the public on May. “
In a letter that accompanied the filing, Mark Zuckerberg, Facebook’s cofounder and CEO, said “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected”. He also told interested investors to understand what this mission means to them, how they make decisions and why they do the things they do.
Facebook has currently more than 800 million active users. Its IPO filing has also revealed that the company had profits of $1 billion on sales of $3.7 billion in 2011. It’s been not quite transparent how Facebook makes money since private companies, like it was before, don’t really reveal their financial information to the public. But now that it already filed its prospectus for IPO with the SEC, the company disclosed that it generates revenue from these two main categories, namely, advertising and “Facebook payments and other fees”.
Facebook’s significant revenue from advertising is not surprising since we all know that Internet firms make money through ads. The second source of the company’s revenue includes the buying of virtual goods and services with Facebook Payments as well as revenue from “business development transactions” and mobile providers. It also revealed that 12% of the company’s profit comes from the revenue generated from Zynga games.
Although Facebook has already been successful as a private company, going to public would mean a big step forward for more opportunities. In this social media era, we can expect more exciting events that will happen not only with Facebook, but also in the social world in its entirety. But for now, all eyes are on Facebook.