Facebook, a Palo Alto, Californina company has filed for a public offering of stock, and 27-year old Mark Zuckerberg, son of a New York dentist and psychiatrist, certainly is hoping the press hype will sell lots of newly issued stock.
Press reports say the company may be worth 100 billion. Let's take a look at that.
While the company has a reported sales number of $3.7 billion last year, the net income would be a fraction of that. Take a number of say, one billion net and figure a prudent investor would be more than satisfied with a 10 percent net return. The value of the company would therefore be about 10 billion.
A less greedy investor might want a five percent return, thus valuing the company at only 5 billion.
An estimated 85% of company revenue is from ads. Some analysts say the ad revenue might remain static, as it's banner ads have to compete against Google's more effective search ads.
The company also shares income from Zynga's games, including FarmVille and CityVille. Zynga has a 2010 exclusive contract to remain on Facebook for five years, keeping about 70% of revenue, 30% going to Facebook.
Zynga stock started trading on NASDAQ December 16, 2011 at $10 a share and bombed the first day, trading down 5%. It's all time low hit $8.45 January 6th, 2012.
Zuckerberg owns about 24% of Facebook, the stock ticker symbol "FB" will be assigned to the stock, and he has, according to it's S1 filing, a number of side deals with "certain stockholders." Presumably made to be sure he'll be in control of the company after stock is sold to the public.
Regulators will take several months to look over the company's filing before anyone can actually buy stock.
Zuckerberg may be hoping for a great 28th birthday this year. On May 14th he may well be a Facebook stock multi-billionaire.
Oh, and Facebook's 8th birthday: February 4th. It began in Zuckerberg's Harvard dorm room.
Happy Birthday Mark and FB.
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