Facebook filed its S-1 with the SEC this past Wednesday, February 1st, and I've spent basically every spare hour since then reading through the document instead of doing anything productive I was supposed to be doing. It's something like 190 pages of numbers and legal boilerplate and I still havent made it all the way through, but the parts Ive read are wild.
The headline numbers: 845 million monthly active users, $3.71 billion in revenue for 2011, and about $1 billion in net income. Theyre reportedly looking to raise something like $5 billion in the offering itself, which would make it one of the biggest tech IPOs ever, maybe the biggest depending on how the final pricing shakes out. Nobody seems to know the ticker for sure yet, at least I havent seen it confirmed anywhere official, but everyone's just assuming its going to be FB because of course it is.
What actually got me wasnt the financials though. It was Zuckerbergs founder letter at the front of the filing. He calls it "The Hacker Way" and spends a couple paragraphs explaining that at Facebook the posters on the walls say "move fast and break things" and "done is better than perfect." Coming from a guy whos about to be worth something like 19 billion dollars on paper, theres something almost funny about him still working the scrappy-hacker-in-a-hoodie angle. I get why hes doing it, its part of the story they need Wall Street to buy. But Ive been on the internet long enough to remember when Facebook actually was scrappy, back when you needed a .edu email just to sign up, and reading a 27-year-old CEO write a letter to future shareholders about hacker culture feels a little like watching your college roommate put on a suit for the first time.
(Side note: does anyone else think S-1 filings should just be required reading in some kind of intro business class? I never had to read one in school and I learned more about how a tech company actually makes money from skimming this over coffee Wednesday night than I did in four years of half-paying-attention to business news.)
The dual-class stock structure is the part that actually matters if youre trying to figure out what this means longer term, more than any single revenue number. Zuckerberg keeps something like 57% of the voting power even after the company goes public, which means this IPO basically lets the public buy in without buying any real control. Thats not unheard of for tech IPOs, Google did a version of the same thing back in 2004, but its still worth sitting with. Youre not buying a piece of a company you get a say in. Youre buying a bet on Zuckerbergs judgment, full stop, and hoping he keeps making good calls for the next decade.
I dont have a strong prediction on where the stock actually ends up trading once it goes live, sometime later this spring is the best guess Ive seen floating around, nobody seems totally locked on timing yet. What I do know is that my own Facebook feed, which lately runs about 40% baby photos and 40% people complaining about their Facebook feed, is about to become the most-picked-apart piece of software on the planet for a few months straight. Every tech blogger I read already has a hot take queued up. Half of them havent read past page ten of the S-1, Id bet actual money on it.
Going to go finish the risk factors section now, which is somehow both the most boring and most honest part of the entire document. The company has to disclose, in writing, to the government, that "mobile usage could hurt us because we dont show as many ads there yet." Which, yeah. That tracks. Nobody in a boardroom wants to admit their whole business model gets shakier every time someone opens the app on their phone instead of a laptop, but there it is, filed under risk factors, item number whatever.