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Facebook shares go public, valued at over $104B

Facebook shares go public, valued at over $104B

May 18, 2012 | By Mike Rose

May 18, 2012 | By Mike Rose
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More: Social/Online, Business/Marketing



Facebook went public this morning, raising $16 billion in its IPO with a near-record-setting valuation of $104 billion.

The company's valuation in an IPO is the third-highest ever recorded, beaten only by the Agricultural Bank of China's $133 billion in 2010, and the Commercial Bank of China's $132 billion in 2006, reports the Chicago Tribune.

The $16 billion raised is the third highest for a U.S. IPO, behind Visa and Enel, and is more than three times what it originally set out to raise.

Shares in the company were priced at $38 each this morning as the stock went public on the NASDAQ Stock Market under ticker symbol FB. Facebook generates revenue in essentially two ways: through advertising, and through payments, traditionally through the Facebook Credits system mandated to all of its games that offer in-game transactions.

While advertising still represents the bulk of Facebook's revenue, a respectable 15 percent came from payment transactions in 2011. According to the company, "substantially all" of these payments come from social games on the platform.

The bulk of this total comes from social games giant Zynga alone - in fact, during the first fiscal quarter of this year, approximately 11 percent of Facebook's revenue came from sales of virtual goods in Zynga games, and an extra 4 percent came from advertising on Zynga games.

However, this is down compared to the estimated 19 percent of total revenue that Facebook attributes to Zynga during the same quarter of the 2011 fiscal year. That lower percentage indicates that Facebook is becoming less reliant on Zynga's financial health.

Zynga also went public at the end of last year, raising $1 billion with an initial public offering priced at $10 per share, and a valuation of $7 billion.

The Farmville developer launched its own social gaming platform earlier this year, and Facebook's revenue will no doubt take a hit if Zynga chooses to move its operations away from Facebook.


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