As Facebook prepares to file its IPO papers any time now, in what is anticipated to be among the biggest debuts ever for a U.S. company, to be handled by Morgan Stanley, “The deal, seen as defining moment for the latest Web investing boom, could raise as much as $10 billion and value the social network between $75 billion and $100 billion.”
With a pre-IPO valuation of $84 billion and a reported IPO target to raise $5 billion, is this the start of another tech bubble? Dealogic lists only Visa, General Motors and AT&T Wireless as higher ranked in U.S. IPO’s than Facebook’s pending deal, making it the largest Internet offering since Google, which in 2004 raised $1.9 billion at a $23 billion valuation.
Driven by dominance in the online display-advertising market, Facebook’s share in 2011 reached 27.9% according to comScore, in advance of Yahoo with 11%, and Microsoft and Google each with less than 5%.
CEO Mark Zuckerberg’s mettle will be tested anew as his reluctance to open his company to public scrutiny and influence is outweighed by regulation requiring a company with more than 500 shareholders to report their financials.
“This is clearly the most important moment in the Valley’s history since the Netscape IPO,” said Stephen Diamond, associate professor of law at Santa Clara University. “The Netscape IPO put the Valley on the map in a different sort of way. Post-Netscape, it was not just a silicon, hardware world.”
Facebook COO Sheryl Sandberg spoke at the World Economic Forum in Davos promoting her company’s role in creating jobs. “Facebook is barely seven years old and has 3,000 employees — and it has created more than 450,000 jobs in Europe and the U.S.,” citing two recent studies; one from the University of Maryland’s Business School, which “found that the company had created as many as 235,644 U.S. jobs, injecting some $15.71 billion into the U.S. economy,” and one from Deloitte, saying “Facebook had had an economic impact on Europe of $20.2 billion supporting 232,000 jobs.”
Sandberg’s mission since joining in 2008 has been to craft a business environment enticing advertisers to leverage social media. “Facebook marketing executives argue that the social network's ads are more effective than other online advertisements because they often come from a friend,” writes the Wall Street Journal, quoting comScore analyst Andrew Lipsman as a strategy that has succeeded. "If you go back several years there was some hesitation for a lot of brands to advertise on social media. That's really changed."
Meanwhile, Facebook’s imminent, proscribed Timeline format is causing a stir according to Sophos’ recent (nonscientific) poll of 4,000 plus users who said they are “worried” by it, with 30% commenting they don’t “know why I’m still on Facebook.”
Slashgear reports that 45% of 5,800 respondents would consider deleting their Facebook accounts when the new stricture is imposed.
Back at the ranch, its new ranch, Facebook is settling in to the penultimate vanity address, 1 Hacker Way, with room to expand to 9,400 employees.
“On a recent afternoon the 57-acre campus hummed expectantly as more than 2,000 employees, about half of whom will probably become instant millionaires, were still settling in to their new digs,” which boasts a Jumbotron outdoor ampitheatre seating 500, breakaway spaces for employee “cozies” and free vending machines stocked with Red Bull and computer accessories.
Facebook has inarguably changed the landscape of life in a digital age. Now, "Facebook's challenge is going to be to maintain that indispensability in a very, very rapidly evolving landscape," Rebecca Lieb, an adviser at the Altimeter Group, told The Financial Times. "AOL had that level of ubiquity, Yahoo had that level of ubiquity, and they both failed to maintain it."