Following months of speculation, the news this week that social networking giant Facebook is to float has excited more than just prospective shareholders. Dubbed by some as ‘the float of the century’, should the company reach the top-end of its estimated $75bn and $100bn valuation, it would become the world’s single biggest technology floatation to date.
For a company that has always safeguarded its financial results, Facebook’s IPO revealed an impressive annual revenue of $3.1bn, up 88% on 2010’s figures and delivering a net profit of $1bn.
With NYSE and Nasdaq battling it out to list shares in Facebook (FB), the question remains: where next for the social network? Year on year growth in Facebook’s revenues have been staggering, bolstered by highly targeted (and highly profitable) advertising and a significant deal with games group, Zynga – that contributed 12% of all Facebook revenue in 2011.
Aside from all the excitement, some point out that Facebook, which was founded just eight years ago is still a young company. Facebook’s star may be shining bright, but is it more a supernova? A look at some of its online peers could hint as to what the future might hold.
One of the world’s favourite search engines, Google, floated in 2004, raising a total of $1.67bn: a figure that is likely to be dwarfed if Facebook does indeed achieve the $100bn expectation. Nevertheless, today Google is valued at an estimated $111.5bn and if Facebook can maintain its market lead, then its current valuation might not seem so lofty.
However, social network users are notoriously fickle – with the experience of sites such as Bebo, Friends Reunited and MySpace providing a cautionary tale.
Investors, stakeholders and 845m users alike will be anxiously watching Facebook developments over the next few weeks. From a financial services PR standpoint, this week has certainly been eventful. Notwithstanding Facebook’s announcement, the regulatory blocking of the proposed NYSE-Deutsche Börse merger has certainly kept us (and our clients) on our toes.
Certainly, the buildup of both have dominated the financial pages for months. So much so, I bet financial journalists are wondering how they’ll fill their pages next week!