The end of last week seemed pretty worthy for Facebook, as it raised a whopping amount of $1.5 Billion on Friday taking its financial valuation to a net worth of $50 Billion. This should definitely make Mark Zuckerberg smile ear-to-ear as his baby project, Facebook has grown to become the third largest online service in terms of financial worth. Google leads the charts with Amazon.com at second position in this list.
Facebook has over-taken Yahoo! and eBay in financial standings. All thanks to the recent investment deals Facebook had with non-US investors through Goldmans Sachs which was worth $1 Billion. In addition to this Russia’s Digital Sky Technologies had also invested half a billion dollars in Facebook during the month of December.
There is no decision taken yet on how, where and when the use the raised funds would happen by Facebook, and assuring that the investment would lead into developing innovative work as always. CFO David Ebersman, in a statement said, “the investment gives the company greater financial flexibility to explore whatever opportunities lie ahead but, for now, the company has no immediate plans for it.” But there were chances of the Palo Alto, California based-company to raise an even higher amount than the raised $1.5 Billion from not just a few investors but an even broader array of investors.
The reason for the not happening of such an event was simple. The idea was to stay under the limitations carved by the securities guidelines that have a say on private companies. Apparently the rulebook states that a company that has more than 500 shareholders should file its financial reports by the end of the financial period. Though, it seems that Facebook has already reached 500 shareholders and reports suggest that they will have to start submitting the reports from the next fiscal year being April 30, 2012. The barring of US investors by Goldmans Sachs from investing in Facebook is because of the “intense media coverage” as foreseen by Goldmans.
The current shareholding scenario at Facebook has lead the investors to hold the Class A stocks. Class B stocks of the company are held by Mark Zuckerberg founder and CEO and other key officials. The Class B stockholders are privileged with 10 times the voting rights of Class A shareholders and this seems quite apparent since Mark and his close associates do not require too much intervention in their decisions. It is a very similar approach that is followed at Google.
But all of this could change if Facebook decides to go for an Initial Public Offering which seems highly likely. Also, with the Social Networking Giant reaching 500 shareholders and more, it is forced to behave like a public company itself. So it might as well go Public and enjoy full benefits of being a Public Company.
Whatever be the decision taken by the Number 3 online firm, here’s hoping that Facebook does not stop entertaining us on a social platform.