Who Stands to Benefit from Facebook’s IPO?

The upcoming Facebook IPO will benefit many people, with Mark Zuckerberg, — co-founder and owner of a majority interest —standing to benefit the most. Mr. Zuckerberg, at the age of 27, will see his personal fortune of more than $17.5 billion increasing by some estimates to $24 billion after the IPO, making him one of the richest men in the world.

According to the S1 filing made by Facebook on February 1st to the SEC announcing its intention to sell shares, Mark Zuckerberg owns 28 percent of Facebook stock, giving him controlling interest of the company regardless of the amount of stock the company plans to float.

Major Facebook Investors

After Zuckerberg, a number of other major investors and co-founders stand to gain substantially from their investment in Facebook.
According to David Kirkpatrick’s book “The Facebook Effect”, the following investors will gain considerably from the IPO:A number of other Facebook employees and individual investors were also cited with ownership of less than one percent, although even less than one percent of a company that will be worth an estimated $75 to $100 billion will still be a handsome amount.

A total of over a thousand Facebook employees will reportedly become instant millionaires after the IPO, which represents only a fraction of the company’s projected valuation after the offering.

Investment Bankers and Their Customers

In addition to the owners of Facebook stock, 31 underwriters will receive Facebook stock to redistribute to their customers at the IPO price. The complete list of underwriters includes:The above mentioned investment banks will receive shares of Facebook at the IPO price before the stock opens for trading on the stock exchange. They will then re-distribute the shares to their best clients.

Facebook has reserved the symbol FB, although it is still unclear whether the stock will trade on the Nasdaq or on the New York Stock Exchange.

Other Beneficiaries

One unlikely beneficiary of the anticipated Facebook IPO is Korean American artist David Chloe. Chloe painted murals at Facebook’s first office building, and instead of collecting several thousand dollars for his work, asked for an equivalent amount of Facebook stock. According to some estimates, Chloe will be able to cash out with more $200 million.

Yahoo has recently filed litigation against Facebook for patent infringement on ten of its patents. Yahoo sued Google in 2004 just before its IPO, and received cash and Google stock as a settlement. Facebook may settle the case with Yahoo sooner than later just to be clear ahead of the IPO.

Other social media sites and their investors also stand to benefit from the Facebook IPO, since Facebook will be looking to acquire its competitors with part of the huge cash infusion they will receive after the IPO.

The IPO market in general will also benefit substantially. Since the dot.com bust in the early 2000s, the number of companies going public has declined considerably. The Facebook IPO will undoubtedly stimulate new IPOs.

Nevertheless, in some way everyone will benefit from the huge Facebook IPO, as researchers have concluded that start-up companies have been responsible for 100 percent of job growth in the United States since the 1970s, with many of those jobs were created after the start-ups had their IPOs.



Published on Mar 19, 2012
By InvestorGuide Staff

Copyrighted 2020. Content published with author's permission.

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