Facebook Initial Public Offering: All you need to know
Facebook has been the largest of the long-standing websites that we all know as “social networking” sites. Facebook has about 3.07 billion monthly active users on it with 10.5 billion monthly organic traffic, and has worked to increase its dominance of social media with smart acquisitions of the photo sharing platform Instagram in 2012 and the messaging platform WhatsApp in 2014.
However, behind the headlines and social media buzz lies a thrilling financial journey, culminating in one of the most highly anticipated IPOs in history.
This article provides a comprehensive overview of Facebook’s Initial Public Offering (IPO), detailing its growth from a startup to a social media giant, the strategic funding rounds leading up to the IPO, the reasons behind going public, and the key shareholders involved. The article serves both educational and informative purposes for readers interested in business, finance, and technology.
From Dorm Room to Global Dominance
In 2004, Mark Zuckerberg and his Harvard peers launched “The Facebook” as a way for students to connect . Its rapid popularity led to its public launch as “Facebook” in 2006, requiring just an email address and a minimum age of 13. This accessibility, along with the ability for users to personalize their profiles, contributed to its widespread appeal and made it one of the world’s most recognizable brands.
Facebook expanded its social media footprint by acquiring Instagram in 2012 and WhatsApp in 2014, solidifying its market position.
It was renamed Meta Platforms, Inc. in 2021 as part of a strategic plan to focus on metaverse development, an interconnected digital world and place in virtual and augmented reality technologies. Its stock ticker changed from FB to META on June 9, 2022.
Funding the Ascent: A Path to IPO
Company funding is crucial for growth and enabling businesses to acquire resources, hire staff, and compete effectively. In addition to this, they also need to adapt and grow to beat the competition in the market. The only way this is possible is with capital.
And as most of us cannot finance these business operations with our own funds, outside company funding is needed. Be it at any stage, almost every company needs some sort of help with funding if they want to move to the next stage.
Here are the main types of funding options: Bootstrapping, Crowdfunding, Angel Investors, Venture Capital Investors, Accelerator and Incubators.
Facebook’s strategic funding rounds
Initial Funding
After Facebook was incorporated in Florida, it received its first major funding of $500,000 from an American entrepreneur Peter Thiel, who is also a venture capitalist, for about 10.2% of the company’s stake and joined its board.
Series A & B Funding
In 2005, Facebook booked another funding round of $12.7 million from Accel Partners, valuing the company at $98 million. Facebook secured its Series B round of funding of $27.5 million from a group of VC investors that included Greylock Partners and Meritech Capital.
Series C
With the Series B round done, Facebook had a high value and it was getting potential acquisition proposals from the likes of Google, Microsoft, and Yahoo. But they rejected these and moved ahead to another funding round later on in 2007 to expand the company.
In the Series C round, Facebook raised about $240 million for a 1.6% stake from Microsoft, valuing the company at $15 billion. The rounds just continued as Facebook kept working on its expansion till it reached its limit of the number of shareholders it can have as a private company. That is when the Facebook IPO took place.
Facebook Initial Public Offering (IPO)
Facebook Inc went public with its initial public offering on May 18th, 2012. With the peak market capitalization at over $500 billion, the company had one of the largest and most anticipated IPOs in history. It was one of the largest technology IPO in the US. Facebook had offered 421,233,615 shares at a price of $38 per share and raised $16.007 billion through that offering.
However, before the Facebook IPO, the company stated that it had a net income of $1 billion in 2011, which was an increase of 65% from 2010. It was also stated that it had 845 million monthly active users and 483 million daily active users as of December 31st, 2011. So, why did they have to go public?
While Mark Zuckerberg initially aimed to keep Facebook private for flexibility, the company’s sheer size and its growing number of shareholders made going public a necessity. A crucial factor was the 1964 SEC rule, which mandates that private companies with over 500 shareholders adhere to the same financial disclosure requirements as public companies. By the end of 2011, Facebook had surpassed this threshold, making public disclosure unavoidable.
Going public also addressed internal issues, particularly those related to employee compensation. While early employees received standard stock options, Facebook later issued Restricted Stock Units (RSUs), which only convert to common stock after an IPO. Furthermore, a 2010 ban on employees selling their stock meant that the only way to cash out vested options was to leave the company. The IPO offered a critical solution, allowing employees to realize the value of their shares and helping Facebook retain top talent.
What if you had invested $10,000 in Facebook at its IPO, buying shares at the $38 offer price on May 18, 2012?
Assuming no splits and just holding, by early 2025, your investment would be worth approximately $172,000, given a share price of about $647.49 in May. That equates to a compound annual growth rate (CAGR) of roughly 22%.
However, if instead you had bought those shares when Facebook briefly dropped to its September 4, 2012, low of about $17.70, your return would look even more impressive. That initial $10,000 would have grown to about $368,000 by May 2025 (assuming the same closing price), yielding a CAGR of around 29–30%. Though the stock struggled early on, falling nearly 50% from its IPO price, the long‑term performance has been remarkable.
Shareholders: The Faces Behind Facebook’s Success
Facebook’s shareholder base includes both individuals and major firms. As a public company, Facebook has some large players as shareholders of the company.
Here are some of the top individual Facebook shareholders:
#1 Mark Zuckerberg – Net worth: $221 Billion
Zuckerberg is by far the biggest shareholder at Meta. A co-founder of Meta (META) formerly known as Facebook, he has served as the long-term chair and chief executive officer (CEO) of the company. He had more than 61 percent of the vote (just over 958,000 shares of Class A and 346.05 million shares of Class B) as of Feb. 29, 2024.
#2 Sheryl Sandberg – Net worth: $2.1 Billion
Sheryl Sandberg was the Meta chief operating officer but resigned in 2022. In 2024, she left the board as well. As of July 2024, she had a net worth of 2.1 billion dollars. As of February 2024, Sandberg was the second-largest individual owner of Meta stock by holding 1.37 million Class A shares.
#3 Christopher K. Cox – Net worth: $277.6 Million
Christopher K. Cox is the Chief Product Officer of Meta, a role he has held since 2014, except after a short break in 2019-2020. In 2005, he joined Facebook, where he had worked in different capacities until he was appointed as Vice President, Product in 2009. Cox comes in as the third-largest individual shareholder in Meta with 379,336 Class A shares in 2024.
Let us look into the firms that are Facebook shareholders as well. These include:
#1 Vanguard Group Inc.
Vanguard is one of the world’s largest investment management companies that has about 430 low-cost traditional funds and exchange-traded funds (ETFs). The firm has about $7.8 trillion in global assets under management as of 30th September, 2023. Vanguard’s funds hold approximately187.18 million shares of Meta which equals around 8.54% of total shares outstanding as of March 2024.
#2 BlackRock Inc.
BlackRock is one of the world’s leading asset and investment management firms. They have an approximate of $10 trillion in AUM as of 31st December, 2023. They also offer a wide range of mutual funds, closed-end funds, iShares, and ETFs. BlackRock’s funds hold about 158.9 million shares of Meta which equals around 7.16% of total shares as of March 2024.
#3 FMR LLC
FMR is another one of the nation’s largest financial services companies. They are known to offer financial planning, brokerage, retirement options, management, and wealth management services. The company owns the investment management firm named Fidelity Investments. It had a total AUM of approximately $12.6 trillion in 2023. FMR’s funds hold approximately 136.7 million shares of Meta which equals to around 6.1% of the total as of March 2024.
Reflections on Facebook’s Market Milestone!
Facebook’s IPO marked a major step not just for the company but also for the tech industry. Going public allowed Facebook to grow faster, reward its employees, and reach millions more users worldwide. Understanding this journey helps businesses and investors see the value of careful planning before going public. If you’re thinking about taking your own company public or managing equity, Eqvista can guide you every step of the way. Visit Eqvista to learn how to handle your company’s shares and prepare for growth.
