Can Facebook deliver on high IPO expectations?

The Facebook IPO buzz has at last become a reality. After years of anticipation, the company finally filed for its initial public offering, and there was no shortage of enthusiasm from industry watchers. “Every startup wants to be the next Facebook, every founder, the next (Mark) Zuckerberg and every angel investor, the next Peter Thiel. It’s easy to see why. Facebook has more than 800 million users, nearly a decade of amazing growth and it just filed the biggest Valley IPO in a decade,” wrote GigaOm’s Edward Aten. In its filing, the company revealed that it’s looking to raise at least $5 billion, and it has a valuation estimated at $100 billion, making it the largest Internet IPO ever—surpassing even Google. The company also indicated that it saw revenue of $3.7 billion with $1 billion in profits last year, and it now has 845 million users. “To put that in perspective, if Facebook were a country, it would be the third largest in the world (behind China and India). The fourth largest (that would be the United States) would clock in at a measly 312 million. It’s worth stepping back for a moment and considering the implications of that,” wrote O’Reilly Radar’s James Turner.

But with its filing came speculation about the company’s future prospects. Will it be able to make money off its incredibly large user base? AllThingsD’s Peter Kafka noted that while Facebook’s ad business is huge, and is growing by leaps and bounds, it’s hard to understand exactly how it works. “The S-1 mentions ‘advertising’ 123 times, and ‘advertisers’ another 117 times,” he wrote. “But when it comes to describing how the company actually sells advertising, it is vague.” To be sure, $3.1 billion in 2011 ad revenue is nothing to blink at, but Facebook will still have to work hard to convince advertisers that it knows what it’s doing. As PaidContent’s Robert Andrews explained, “Facebook has made a $3.1 billion business from a social advertising sector many, even it, concede is experimental and unproven. Now it must find that proof. But experimenting on Wall Street, as well as Madison Avenue, could prove challenging.”

• Facebook Sets Historic IPO (Wall Street Journal)
  
• Facebook Files for an I.P.O. (NY Times)
  
• Facebook has nothing to fear, except itself (GigaOm)
  
• Brother, Can you spare $100 billion? (O’Reilly Radar)
  
• Facebook IPO Filing Flings Open the Social Network Kimono (Mashable)
  
• Facebook and the big IPO letdown (The Washington Post)
  
• Mobile, Local are Key Factors in Facebook’s Post-IPO Revenue Growth (Ad Age)
  
• Facebook’s IPO filing: Top 10 surprises (CNET News)
  
• Is Facebook’s IPO the start of something, or the end? (GigaOm)
  
• Facebook’s Ad Business Is a $3 Billion Mystery (AllThingsD)
  
• Now Facebook Must Prove To Wall Street Its Ads Really Work (paidContent)