The weeks of speculation and rumors have come to an end, Facebook has officially filed an IPO with the SEC, turning the social media giant in to a publicly traded company.   Facebook is hoping to raise $5 billion dollars by selling a small portion of its shares to the public in its IPO.  If this is accomplished it would easily make it the highest internet based IPO in history, surpassing the previous leader Google which garnered $1.9 billion dollars with its IPO in 2004.

If Facebook is able to raise the necessary funds, it is expected that the stock will begin trading publicly in 3-4 months on either the NYSE or the NASDAQ under the symbol FB.   Facebook CEO Mark Zuckerberg opted to follow a similar formula to Google when preparing the IPO.  There will be two classes of stocks ensuring that Zuckerberg maintains overall control of the company.  According to the documents filed with the SEC Zuckerberg will control now 57% of the shares vote (approximately 534 million shares).

With Facebook’s intent to turn into a publicly traded company the general public is now receiving a much greater insight in to the inner workings of the company.  When a company plans to turn public it is necessary for the company to include a risk disclosure in its IPO.  These risk factors are intended to warn investors of any potential risks when purchasing shares of a company.  In the case of Facebook’s IPO they listed approximately twenty pages in their Risk disclosure.  Many of these will be treated as being just precautionary, however there were some important “risk factors” that investors are likely to take notice of.

Mobile: This particular issue has drawn a lot of attention since the release of the IPO.  Facebook was initially designed to be accessed on the web.  However there is a growing trend of users  accessing the site via mobile devices (it is estimated that 425 million Facebook access the site through mobile).  The reason that this is a major concern is that Facebook receives a large portion of it’s income through advertising revenue (85% of total income last year), Facebook currently does not generate ad revenue through mobile access.  In order for the company to continue to excel and grow revenues, it will need to implement a plan to monetize mobile access.

Growth Rate:  Although it would appear that Facebook’s seemingly exponential growth rate in the past would be an asset Facebook listed it as a potential risk.  This was justified with the following statement in the risk disclosure, “other social networking companies that achieved early popularity have since seen their active user bases or levels of engagement decline, in some cases precipitously.”  This was certainly the case with various other social media sites such as Myspace and Friendster.  Facebook’s growth rate will inevitably slow, they will have to tap in to new markets and keep existing users satisfied in order to remain the social media juggernaut that they currently are.

Advertisers:  Although Facebook does receive a large portion of it’s income from advertising, it still represents only a marginal percentage of overall advertising spending compared to traditional media.  Although Facebook is making great strides to improve its functionality as an advertising platform with the implementation of the open graph API, including timelines and sponsored stories, advertisers may view this as an untested medium.  However it should be noted that if these recent changes to Facebook are accepted by both users and advertisers, it could shift Facebook from being an ancillary concern when discussing advertising budgets, to being the primary focus.

Although Facebook certainly covered a lot of potential risks in its IPO, it’s still expected to perform extremely well on the NYSE or the NASDAQ.  Many experts are predicting that Facebook’s IPO will outperform Google’s and become the largest IPO in history.