Facebook to Raise $5 Billion in IPO

Finally, the wait is over for investors. Facebook, the social networking giant, late Wednesday, filed for an initial public offering (IPO). The company plans to raise $5 billion in its much awaited IPO.�

According to data from Dealogic, Facebook�s IPO will be the largest global IPO ever by an Internet-focused company. Google Inc.�s (NASDAQ: GOOG) IPO is currently the largest U.S. Internet IPO. Investors have been waiting for Facebook�s IPO for over a year now. Experts believe that the company could be valued between $75 billion and $100 billion.�

Currently, Facebook has more than 800 million active users, with majority of those in the U.S. The company filed a 197-page prospectus with the U.S. Securities and Exchange Commission late Wednesday. The filing includes some interesting details on the company.�

The filing confirms that Facebook is very profitable and is growing. Facebook�s revenue has risen from $777 million in 2009 to $3.7 billion last year. The company�s earnings have also grown at a strong pace in the same period. The company�s earnings have grown from $122 million in 2009 to $668 million last year.�

Facebook also has significant cash on its balance sheet. The company ended 2011 with $3.9 billion in cash on hand.�

But the big question investors are now asking is that can Facebook continue to grow at the same pace. Facebooks�s rise has been fueled by expansion of its users, which makes it a more attractive marketing vehicle for ads. Advertising revenue accounts for most of the company�s revenue at the moment.�

Facebook generates nearly $4.39 in revenue per user, which according Tim Loughran of University of Notre Dame is a surprisingly low number. Google, which has annual revenue of approximately $38 billion, generates revenue of $30 per user of its services. This is certainly one are where Facebook can grow. According Loughran, Facebook needs to find more ways to get revenue from its users.�

In the filing, Facebook said that its most promising expansion opportunities as Brazil, Germany, India, Japan, Russia and South Korea. The California-based company also hopes to make its service available in China.�

The filing suggests that Mark Zuckerburg will sell an unspecified number of shares in the IPO to cover a tax bill for exercising a stock option to acquire 120 million shares. Zuckerburg currently owns 534 million shares in the company.�

Facebook�s IPO follows a series of Internet-related IPOs last year, including that of LinkedIn Corp. (NYSE: LNKD) and Groupon Inc. (NASDAQ: GRPN)