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Winnipeg Free Press - PRINT EDITION
Facebook IPO set to raise up to $18B
Likely to hit Nasdaq this morning
NEW YORK -- Facebook's initial public offering of stock is shaping up to be one of the largest ever. The world's definitive online social network is raising at least $16 billion, a big windfall for a company that began eight years ago with no way to make money.
Facebook priced its IPO at $38 per share on Thursday, at the high end of its expected range. If extra shares reserved to cover additional demand are sold as part of the transaction, Facebook Inc. and its early investors stand to reap as much as $18.4 billion from the IPO.
The IPO values the company at about $104 billion, slightly more than Amazon.com, and well above well-known corporations such as Disney and Kraft.
The $38 is the price at which the investment banks orchestrating the offering will sell the stock to their clients. The stock is expected to begin trading on the Nasdaq Stock Market sometime this morning under the ticker symbol "FB." That's when so-called retail investors can try to buy the stock.
Facebook is the third-highest-valued company ever to go public, according to data from Dealogic, a financial data provider. Only the two Chinese banks have been worth more. At $16 billion, the size of the IPO is the third-largest for a U.S. company, squeezed between No. 2 power company Enel and No. 4 General Motors, according to Renaissance Capital. The largest U.S. IPO was Visa, which raised $17.86 billion in 2008.
For the Harvard dorm-born social network that reimagined how people communicate online, the stock sale means more money to operate the data centres that hold the trove of status updates, photos and videos shared by Facebook's 900 million users. It means more money to hire the best engineers to work at its sprawling Menlo Park, Calif., headquarters, or in New York City, where it opened an engineering office last year.
And it means early investors, who took a chance seeding the young social network with startup funds six, seven and eight years ago, can reap big rewards.Peter Thiel, the venture capitalist who sits on Facebook's board of directors, invested $500,000 in the company back in 2004. He's selling nearly 17 million of his shares in the IPO, which means he'll get some $640 million.
The $104-billion valuation of Facebook, whose 2011 revenue was $3.7 billion, has its skeptics. Google Inc., whose revenue stood at $38 billion last year, has a market capitalization of $207 billion.
"There seems to be somewhat of a hype around the stock offering," says Gartner analyst Brian Blau in somewhat of an understatement.
"It's probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome," Blau says. While most Facebook users won't see a penny from the offering, they are all intimately familiar with the company, so it resonates as something they understand.
And then there's CEO Mark Zuckerberg, who just turned 28 on Monday.
He has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds.
Though Zuckerberg is selling about 30 million shares, he will remain Facebook's largest shareholder.
-- The Associated Press
Republished from the Winnipeg Free Press print edition May 18, 2012 B6
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