Social networking giant Facebook filed its highly-anticipated initial public offering (IPO) Wednesday with the Securities and Exchange Commission, hoping to raise an initial $US5 billion ($A4.7 billion).
That figure, according to The Wall Street Journal, is most likely just a placeholder. When Facebook makes its debut in the stock market this spring (under the ticker "FB"), it hopes to raise as much as $10 billion, The Journal said, citing "people familiar with the matter."
In the filing, the company disclosed details pertaining to both its revenue and growth, but some figures were surprisingly less than market estimates. Facebook said it saw $3.71 billion in revenue in 2011, up from $1.97 billion a year earlier. Some estimates, however, had put the site’s annual revenue as high as $4.27 billion, The Journal said.
Much of its advertising revenue can be attributed to its highly targeted messaging, the company said in the filing. The massive amount of information it stores on its 800 million user base allows advertisers to more effectively target ads to the most relevant consumer groups.
Facebook said it saw an increase in the average price per ad on its site because of "factors including improvements in our ability to deliver more relevant ads to users and product changes that contributed to higher user interaction with the ads by increasing their relative prominence."
The company’s 27-year-old founder and CEO, Mark Zuckerberg, who began working on the site out of his dorm room at Harvard University in 2004, said he plans to maintain Facebook’s focus on building products, not revenue growth.
"We don't build services to make money; we make money to build better services," he said in a letter to prospective shareholders. "These days I think more and more people want to use services from companies that believe in something beyond simply maximising profits."
The IPO could potentially mean hundreds of millions in fees for the six banks managing the site and, as speculated, The Wall Street Journal confirmed that Morgan Stanley will top that list of banks with its sought-after "left-lead" position. J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Bank of America Merrill Lynch, Barclays Capital, and Allen Co. are also in on the deal.
Facebook’s $5 billion IPO is the largest U.S. internet IPO in history. Google, the previous title-holder, filed an IPO of $1.9 billion in 2004.