Facebook unveils $5 billion IPO

After days of intense speculation Facebook has unveiled its plans for a $5 billion (£3.2 billion) initial public offering (IPO), filing papers with the Securities and Exchange Commission (SEC) late on Wednesday.

Founded in 2004, the company has gone from Harvard dorm to an international community of 800 million active users. With the IPO set to be the largest ever sale of shares by an internet company, expectations are high.

The anticipation over the float has largely been focused on the chance to finally examine the company's financial results and lift the lid on the details of the business.

Documents released as part of the filing showed that during 2011 the company produced an impressive $1 billion in net income - a rise of 65% on the previous year.

Estimates of the value of the company on secondary markets range between $80 to $100 billion, which would place the social network alongside the likes of global giants McDonald's (MCD) and Amazon (AMZN).

"That figure looks ridiculous for a business with much to prove, but optimists will say that there was similar scepticism about Google's (GOOG) IPO in 2004. The search firm went on to show that it was worth a whole lot more than the value at which it floated," suggested Rory Cellan-Jones, BBC technology correspondent.

"Whatever the price, the Facebook IPO will generate eye-watering sums for investment banks, lawyers, and of course Mark Zuckerberg and other owners of a slice of the business. Then the really difficult bit starts - showing that the Facebook audience really is a valuable resource, willing to be targeted with more and more advertising."

Some investors are asking whether the listing represents the peak in the cycle for online technology stocks and the prospects for the online sector over the next year. However Mark Zuckerberg, the founder of Facebook, believes the value the company adds is clear. "We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services," he commented in documents provided to the SEC.

"As people share more, they have access to more opinions from the people they trust about the products and services they use. This makes it easier to discover the best products and improve the quality and efficiency of their lives."

Get more on the sector and how investors can make a play in our guide to investing in technology.