Shortly Facebook will begin the process of becoming a public company in the USA and it is rumoured that the company will generate $10 billion from its Initial Purchase Offering (IPO). To put this in to perspective, that makes it more valuable than companies such as Apple. Remember that Google generated $1.9 billion when it floated in 2004.
Facebook’s revenue stream comes through advertising and last year the company made a $355 million net profit from income of $1.2 million. At $10 billion that will make the IPO one of the 5 largest of all time. Rumours do have the company valued at $100 billion but to put that into some kind of perspective, that’s the value of McDonalds the hamburger restaurant. Morgan Stanley is likely to handle the administration of the floatation worth millions of dollars to the business. Facebook is could go public in April 2012 since it has to publish its annual accounts at this time anyway.
The world economy is fairly unpredictable at the moment, and Facebook is doing as well as it possibly can at this point in time. Other technology IPOs occurring around the same date include LinkedIn and Groupon, both of whom compete for online advertising using different but similar models as Facebook for income generation. One thing is for sure, Facebook’s early investors will become the new mega-rich of Silicone Valley in the same way that Google’s original venture capitalists and entrepreneurs did not so long ago.