Diary of an IPO: Facebook’s Amended S1

Posted by on April 23rd, 2012

I am about to sit down with the most recently filed version of Facebook’s S1 IPO filing and sift through yet another several hundred page document full of legalese and numbers.  In a previous blog, when the initial S1 was filed, I noted how I was disappointed that there was not a whole lot of information in the filing to justify a $100 billion valuation.  With so many gaps to fill, here are a few items that I hope are addressed in the amended version.

First, I hope that Facebook explains its acquisition strategy. In the initial S1, the company’s acquisition strategy was not discussed in great detail.  Clearly, the $1 billion acquisition of Instagram and the company’s recently announced intent to acquire $550 million of Microsoft’s patents are part of a plan to grow Facebook’s business.  At the same time, it is also an acknowledgement that organic user growth isn’t the be-all-end-all for the company.

Second, I will be looking to see whether the new S1 speaks more to the company’s corporate governance intent, particularly with respect to Mr. Zuckerberg’s voting power.  See my previous blog regarding the Instagram acquisition and you will understand what I am talking about when it comes to shareholders having a say in the future of the company.

Finally, what is the company’s business plan?  In my first blog discussing the Facebook IPO, I noted that based on what was presented in the initial S1, I had no idea what the company planned to do to justify a $100 billion valuation. What are its plans to monetize its nearly billion person user base?  How is it going to become less dependent on advertising?   I encourage potential investors to pay close attention to the amended filing to see how the company addresses these questions.

Significant value undoubtedly exists in Facebook.  The question is how much and how high should this valuation be?  So, here I go – I will let you know shortly what the updated S1 reveals.

Stay tuned . . .