WELCOME

Facebook Incorporation

The Initial Public Offering

Introduction
The entire market is waiting for the emergence of
Facebook as a publicly traded company, said Jonathan
McNeil, Lead analyst at CXT Technology Fund.
Basically Facebook is an online social networking
service founded by Mark Zuckerberg and his
roommates. Facebook held its initial public offering (IPO)
on Friday, May 18, 2012. The IPO was one of the biggest
in technology, and the biggest in Internet history, with a
peak market capitalization of over $104 billion. Media
exparts called it a "cultural touchstone

Company History and Overview

Facebook was not originally created to be a
company. It was built to accomplish a social mission
to make the world more open and connected. We
think its important that everyone who invests in
facebook understands what this mission means to us,
how we make decisions and we do things we do. Most
great people care primarily about building and being a
part of great things, but they want to make money
simply put: we dont build services to make money; we
make money to build better services.
- Mark Zuckerberg

Company History and Overview

Facebook was launched in February 2004 by Mark
Zuckerberg and his four roommates at Harvard
University. It was designed as a social utility to allow
friends to connect to each other over internet. After an
initial run-in with the university administration, the
Harvard site took off, leading Zuckerberg to expand to
other US and Canadian universities. By mid-2004 had
dropped out of Harvard, incorporated Facebook and
moved operation to Palo Alto, Califonia, where the
company first attracted its first investor, PayPal cofounder Peter Thiel.

Company History and Overview

In March 2006, Zuckerberg declined an offer to
sell the company for $750 million, arguing it was
worth $2 billion. His optimism was confirmed in
October 2007 when Microsoft bought a 1.6
percent for $240 million, valuing Facebook at $
15 billion. Facebook continued its rapid growth
as it was getting more active users.

Company History and Overview

Facebook Timeline, showing active users and revenue:
Year

Active Users

Revenue

2004

1 million

$ 382,000

2005

6 million

$ 9 million

2006

12 million

$ 272 million

2007

58 million

$ 153 million

2008

145 million

$ 272 million

2009

360 million

$ 777 million

2010

608 million

$ 1,974 million

2011

845 million

$ 3,711 million

Statement of Problem
Facebook is an online social networking service
and a new company in stock exchange. The
problem is to make decision whether to invest or
not to invest in Facebooks IPO considering the
impact of dot-com bubble of 1990s.

Findings and Analysis

Facebooks Business Model:
Advertizing
Payment Business

User Categories and revenue per user:

MAUs
DAUs
ARPU

Findings and Analysis

Competitive Landscape:
Myspace
Google+
Twitter
Linkedln

Findings and Analysis

Economic and Market Conditions:
Potential performance of Facebooks IPO in the
perspective of global economic environment.
Performance of competitors IPO in the perspective of
global economic environment.

Findings and Analysis

Capitalizing and Selling Stockholders
Dual-class Share Structure
Sales by Current Shareholders
Fees Payable to Underwriters

Pricing of Shares

Evaluation
Evaluation proceeds by using the perception of Damodarans Assumption
Forcasting of Cost of Capital
Competitive Threats.

Recommendation
CXTs investment committee is still confused
whether they should invest on Facebooks IPO
or not. However, I believe Facebook has more
opportunities to grow. They should invest on
Facebooks IPO although there are some
competitive threats. In my point of view
competitive threat can be overcome as there are
lot of people are still to come to the Facebook
network.

THANK YOU