The dream of Silicon Valley: 8 years of Business Zuckerberg's worth 28 billion dollars

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Facebook plans to raise 5 billion dollars in IPO

In the past, the famous university dropout, turned into a billionaire business leader, such a myth once again in the United States Silicon Valley staged.

United States time in Wednesday, Facebook formally submitted a listing application to the Securities and Exchange Commission (SEC), which was "FB", with a maximum financing of $5 billion, with Morgan Stanley acting as the main underwriter, failing to disclose the price range and the location of the final listing.

Facebook will set a new record for global internet companies to finance the IPO. Mark Zuckerberg, its founder, has a 28.4% per cent stake in Facebook, and Zuckerberg's personal book Wealth will reach $22.7284 trillion, based on a two-tier valuation of Facebook's $800.1 trillion trillion.

Annual revenue of 4.39 dollars per user

Zuckerberg is a model of American Silicon Valley dreaming. Zuckerberg, who was a Harvard undergraduate, founded Facebook in 2004 and eventually decided to drop out of school because of the popularity of the site and migrate to California's Silicon Valley to concentrate on entrepreneurship. 8 years later, the dream became true, and Mr Zuckerberg made it clear in an open letter to investors that "Facebook was not created to be a company." It was born to fulfill a social mission: to make the world more open and more interconnected. ”

Mr Zuckerberg said Facebook "has always placed its social mission, the services it is developing, and its users first", a "no ordinary Way" for a listed company. He highlighted the three broad visions of Facebook, including "Consolidating human connections", "improving people's links to business and the economy", and "changing people's links with government and social institutions".

According to its prospectus, Facebook has 845 million monthly active users (MAU) and 483 million daily active numbers (DAU) by the end of 2011. In 2011, Facebook had a total revenue of $3.711 billion, with a diluted earnings of $0.46 per share for ordinary shareholders in categories A and B, with a net profit of $1 billion and a net interest rate of 27%.

According to Tim Loughran, a professor of finance at the University of Notre Dame, Facebook has a per-user revenue of 4.39 USD/year, or 37 cents/month, based on the data. But with a two-tier market valuation cap of 100 billion, Facebook's valuations have reached 100 times times the net profit of 2011.

Among them, in the composition of the revenue, Facebook 2011-Year advertising revenue of 3.154 billion U.S. dollars, payment and other service charges revenue of 557 million U.S. dollars, advertising revenue is the main source of revenue, 2011 Q4 single Quarter count advertising revenue accounted for up to 83%. This corresponds to the "payment and other service charge" revenue growth rate, from 2010 Q1 of $5 million to 2011 Q4 188 million U.S. dollars, the revenue from 1% to 17% of revenues. Zynga, the listed company, is now Facebook's biggest client, with 12% of its revenue from Zynga in 2011.

According to emarketer, a market research institute, Facebook's share of the US internet display advertising market in 2011 has reached its first (16.3%). EMarketer analyst Debra Aho Williamson that Facebook's biggest challenge now is how to keep advertising revenue growing because it is their main source of revenue, and Facebook is aggressively expanding its new revenue stream.

User growth is the biggest challenge

Although Facebook has yet to disclose its distribution and distribution range, market participants believe it will reach 26.9 times-fold, far exceeding its current 5 times-fold market rate. Companies in a fast-growing process are mostly at a higher-than-low pace, with a 20 times-fold price-to-earnings ratio and a 121 times-fold IPO in 2004.

Weifeng, chief analyst at Chinaventure Group, says the two-tier market is "a bit higher" in terms of the current global capital market environment. "On the one hand, capital markets in recent years have not seen such as Facebook in a single industry in the absolute monopoly, and has been at a rapid growth stage of the company; On the other hand, Facebook is still short and needs to develop new business models, unlike Apple or Amazon (Weibo) These companies have had a long cycle of industry development, mature business models, and, in recent years, Facebook's financing valuations and the market's pursuit of its IPO, valuations will have a ' bubble ' may not rule out an IPO after a fall process. ”

In fact, whether it is to expand the new business model, or to maintain the existing important business model advertising revenue growth momentum, can not be separated from a core element of "user growth rate." Data show that in 2009, Facebook active user growth rate of more than 20% per quarter, the 2010 month active users and active users of the growth rate fell to more than 10%, 2011 further down to less than 10%. The user scale expands unceasingly, the user growth rate is reduced, this is the reality which most enterprises have to face after the high speed growth period.

Facebook wrote in the IPO document: "We think our user and revenue growth rates will decline over time." For example, our annual revenue growth rate for 2010 years is 154%, but only 88% in 2011 years. Historically, user growth has been a major driver of our revenue growth. As our market penetration improves, revenue grows to a higher level and competition intensifies, Facebook's user growth and revenue growth are bound to slow. As growth rates decline, investors ' perception of our business is likely to be adversely affected, and the market prices of our Class A common stock will probably fall. ”

Currently, Facebook accounts for $1.512 billion in cash, 4.6 billion in current assets and $890 million in current liabilities. Weifeng says Facebook is not short of money, and launching IPOs is more about cash for investors, employees and managers, as well as facilitating their foray into global markets and investment and mergers. However, the listing is a double-edged sword, most of the companies listed in the face of financial disclosure, decision-making more inclined to short-term behavior to obtain good financial performance. And in the past, "innovation" as the driving force of Facebook, after the listing of the capital market under the regular inspection, adhere to the long-term strategy will be a test.

Nancy reporter Cherius Intern Zhao Yi