Facebook files with SEC for $5 billion IPO

Facebook filed papers with the Securities and Exchange Commission on Wednesday to begin selling shares of stock. 

The company, co-founded eight years ago by Mark Zuckerberg in his Harvard dorm room, aims to sell $5 billion in stocks in its initial public offering under the stock symbol “FB.”

According to the document, Facebook has 845 million users worldwide, and its revenue in 2011 was $3.7 billion.

The company acknowledged it generates a “substantial majority” of its revenue from advertising. In 2009, 2010 and 2011, advertising accounted for 98 percent, 95 percent and 85 percent, respectively, of Facebook’s revenue.

{mosads}The company noted that it does not display ads on its mobile app, and that if users begin exclusively using the mobile version of the website, it could hurt the company’s revenue.

Most of the company’s non-ad revenue is dependent on Facebook’s relationship with game developer Zynga. 

The company also acknowledged that government regulation of privacy, data protection and intellectual property could hurt its business.

“Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters,” the company wrote. “Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.”

Due to shares under his control and agreements with other stockholders, Mark Zuckerberg will own a majority of the company’s voting power.

“As a result, Mr. Zuckerberg has the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets,” the company noted.

The public offering will likely make Zuckerberg one of the world’s richest people.

Facebook said it faces stiff competition from companies including Google, Microsoft and Twitter.

“Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate including: by integrating competing social networking platforms or features into products they control such as search engines, web browsers, or mobile device operating systems; by making acquisitions; or by making access to Facebook more difficult,” the company warned.

The Federal Trade Commission is currently probing whether Google has engaged in anti-competitive conduct. Earlier this month, Google launched its “Search plus Your World” feature, which integrates content from Google+, but not Facebook, into its search results. 

—Updated at 5:22 p.m.