Facebook’s IPO is going to be as big if not bigger than Google was a few years ago. The S-1 filling document is a very lengthy dry read that most people will skip. We are not most people. The S1 was very insightful. For one thing we don’t have to wonder if Zuck would still be in charge. He will have the most votes based on his type of stock. The shares will be split into “A” and “B” shares, where the latter get 10 votes per share, and the former get one. Zuckerberg presently owns around 28.2% of the share capital.
Facebook had revenues of $3.7bn and had an operating income of $1.7bn.
They had 845 million active users and the numbers are still growing.
Saying Facebook depends on advertising is a common sense but what surprised us is that it only accounts for 85% of the revenue. The rest comes from in-app purchases.
Zynga is almost as important as Mark is for the company. In 2011, they were 12% of Facebook’s revenue. Facebook wrote in that “If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected.”
The mobile version of the site had 425 million monthly active users in December 2011. There are no ads on the mobile site but that may soon change. The S1 states, “our revenue may be negatively affected unless and until we include ads or sponsored stories on our mobile apps and mobile website. We believe that people around the world will continue to increase their use of Facebook from mobile devices, and that some of this mobile usage has been and will continue to be a substitute for use of Facebook through personal computers. In 2011, we began serving our products from data centers owned by Facebook using servers specifically designed for us.” I wonder will the servers help place ads on mobile devices?
There are 138m shares that have been issued to the employees of Facebook for $0.83. At an expected price of about $45, that’s almost $6.2bn profit for the employees. That is not a bad turn around for a 401K plan.