Facebook, Inc: The Initial Public offering

Facebook, Inc: The Initial Public Offering

Business Operations

Facebook is an internet platform that allows users to share comments, upload photos, and recommend experiences to friends. Sources of revenue for Facebook come from advertising and sale of social goods. Advertising revenues account for 95% of total revenues. Companies have the ability to advertise to a specific demographic, with interest and social connections due to Facebook owning the personal information uploaded. Facebook has mapped all connections created between users and their friends, helping companies to access data for further use.

Facebook adds value to the users, developers and advertisers. Users have the ability to connect with friends with over 900 million monthly users worldwide. It is also a medium to enable users to share content and publish their opinions. Platform developers benefit from Facebook due to its customizability and have the ability to integrate with Facebook to create social apps and websites. Platform developers range from students to programmers at leading websites. Advertisers can capitalize on the reach, relevance, and social context that Facebook offers. Advertisers can specifically target their content based user characteristics such as demographic factors and specific interests that are chosen to be shared on Facebook.

IPO

Facebook’s intentions on going public is based on creating a public market for their Class A shares, enabling future access to the market. Access to the markets allows for the ability to obtain additional capital and facilitate the distribution and sale of shares. The intentions of the proceeds gained by the initial offering is to help with working capital needs as well as other general corporate purposes. Additionally, a portion of the proceeds will be used for any future acquisition targets as well as for the anticipated tax withholding and remittance obligations related to the initial settlement of the RSU.

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