Facebook IPO Shows It’s a Money Machine

FacebookWith Facebook’s IPO filing, the public finally gets a glimpse of the social network’s finances, and the company once thought to have no business plan reveals itself to be quite the money generator.

It shows the company made about $3.7 billion in revenue and made $1 billion in profit in 2011. Eighty five percent of that was from advertising and 66 percent was generated in the United States, though non-domestic sources of revenue are growing. It has 845 million users. (The IPO also included a number of other interesting statistics.)

The filing also outlines the control that founder Mark Zuckerberg has over the company, which SiliconValley.com describes as:

…two classes of stock ownership and a highly unusual arrangement that gives Zuckerberg 57 percent of the voting power of Facebook stock.

As CNET explains it, Zuckerberg not only can control who is named to the company’s board of directors, he also can veto what they do. And he could name a successor, in the event of his death.

The papers filed Wednesday do not specify how many shares will be sold, their offering price, or the date they will be offered. Shares typically go on sale three or four months after a filing.

The $5 billion IPO  is only about half that anticipated, though it’s expected to set the company’s overall value at $75 billion to $100 billion – a valuation wildly in dispute. By contrast, Google’s 2004 IPO raised $1.9 billion from investors, creating a valuation of $23 billion.

The filing also points out the company’s vulnerabilities, such as the push to mobile. Though the company has more than 425 million monthly active mobile users – about half its total – its app and mobile website do not display advertising and so far generate no revenue.

It also faces significant challenges with privacy concerns, potential government regulation, rampant hacker attacks and more. For instance, it settled with the Federal Trade Commission in November over allegations of deception and privacy violations. But it’s also been beefing up is lobbying arm in Washington and even in September created its own political action committee, following in the footsteps of companies such as Microsoft and Google. That PAC raised $170,000 in the last three months of 2011.

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