Facebook files for IPO and plans to expand payments strategy

Facebook files IPO

Facebook has filed for its highly anticipated initial public offering (IPO), aiming to raise $5 billion for the company. The IPO is expected to take place in the spring with six banks managing the offering including Morgan Stanley, JP Morgan, Goldman Sachs as well as Merrill Lynch, Barclays and Allen&Co. The filing opens up Facebook’s financials for the first time, showing strong growth with profits hitting $ 1 billion last year from $ 3.71 billion of revenue. Payments (Facebook credits) generated $ 557 million last year, accounting for 15% of the year’s revenue. Peter Vogel, co-founder of Plink, a Facebook Credits-based loyalty programme, predicts the Facebook Credits economy to double every year for the next five years, becoming a $ 15 billion business by 2016. Going forward, Facebook plans to continue developing its payments strategy and generate increased revenue in other areas than buying virtual goods or status with Facebook Credits.

One such example is Count Me In, a Facebook group gift shopping app, which has seen lots of interest as retailers adapt its proprietary platform to their social media strategies in the hope of generating revenues through Facebook. The app enables retailers to create gift registries and sell products from their Facebook account while consumers can browse through thousands of gifts, designate a gift recipient and invite friends to contribute towards it. Jeff Saul, co-founder of Count Me In confidently claims that “in the last week alone we have signed numerous multi-year agreements with some of the most recognized retail brands. Now that Facebook has publicly signaled its intent to focus on commerce, there is little doubt we are about to lead what is sure to become the hottest trend in retail.”

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