Facebook, the world’s largest social network, holds its initial public offering (IPO) and raises $16 billion. It was the largest technology IPO in American history to that date, and the third-largest IPO ever in the United States, after those of Visa and General Motors. At the time it went public, Facebook was valued at $104 billion and had some 900 million registered users worldwide.
Facebook was founded as TheFacebook in February 2004 by Harvard University sophomore Mark Zuckerberg and fellow classmates Chris Hughes, Eduardo Saverin and Dustin Moskovitz. The site originally was only for students at Harvard; however, it soon opened up to other universities. In June 2004, Zuckerberg moved Facebook to Palo Alto, California, and by the end of the year several Silicon Valley entrepreneurs had invested in the business and it had almost a million registered users. In 2005, Facebook (as it officially became known that year when “the” was dropped from its name) spread to American high schools and foreign schools, and the following year, anyone who was at least 13 years old was allowed to sign up. (Facebook always has been free to join; at the time of its IPO, the bulk of the company’s revenues came from advertising.)
As the site’s user base grew rapidly and its functionality expanded (the “news feed” was added in 2006 and the “like” feature in 2009), Facebook helped change how people communicate and share information. During the 2008 U.S. presidential race, Barack Obama used Facebook to build a following, especially among young voters, a constituency that helped him win the White House. Additionally, during the political uprisings in the Middle East that began in late 2010 and came to be called the Arab Spring, activists used Facebook (and other social media tools, notably Twitter) to share photos and videos of atrocities their governments were committing against citizens, and also to organize protest events.
In 2010, The Social Network, a feature film about the founding of Facebook, made its debut. The movie, which earned eight Academy Award nominations, chronicled the 2004 lawsuit filed by Cameron and Tyler Winklevoss and Divya Narendra, Harvard students at the same time as Zuckerberg, who claimed he stole the original idea for Facebook from them. Facebook countersued, and in 2008, the Winklevosses and Narendra agreed to a $65 million settlement from the company.
Facebook made the Dobbs Ferry, New York, native Zuckerberg, the son of a dentist, a billionaire. At the time of the company’s much-anticipated IPO on May 18, 2012, Zuckerberg was worth some $19 billion. However, despite all the fanfare surrounding Facebook’s IPO, its shares closed the first day of trading at $38.23, only slightly above the $38 IPO price, which many investors considered a disappointing performance.