Print 24 comment(s) - last by deathwombat.. on May 16 at 3:47 PM

Facebook is now looking to raise about $12 billion

Facebook's $100 billion initial public offering (IPO) was already set to be one of the largest IPO's in the tech industry, but now, the social network is looking to surpass the $100 billion mark by raising another $12 billion.

According to a filing with the U.S. Securities and Exchange Commission, Facebook increased the price target range from $28-$35 per share to $34-$38 per share today. This values Facebook at about $93 billion to $104 billion, exceeding the $100 billion mark.

At about $36 per share, Facebook would raise $12.1 billion.

Social networking giant Facebook revealed that it was planning a 2012 IPO back in November 2011. The company was talking about raising $10 billion for the initial public offering. Many had previously thought a 2011 IPO was in the works, but a shaky economy and ongoing privacy battles with the U.S. government put everything on hold.

In February 2012, Facebook made the IPO official. The company said it was looking to sell $5 billion of its private shares and hoped to be valued at $100 billion.
The set date for the company to go public was May 18.

The social network plans to complete the IPO later today, which is two days ahead of schedule. Facebook is expected to price its shares on Thursday and begin trading under the ticker "FB" on Friday.

Facebook's IPO is the largest ever to come out of Silicon Valley. In 2004, Google raised nearly $2 billion. Last year, Groupon raised $700 million and Zynga raised $1 billion.

After the IPO is completed and Facebook begins trading, the social network plans to sell 12.3 percent of the company, or $337.4 million shares.

Source: Reuters

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Over valued
By FITCamaro on 5/15/2012 11:02:51 AM , Rating: 5
Just another example of how hype can sell. What does facebook do that justifies that kind of value? Where is the equity? Some companies have physical assets that are valued at or near what the company is worth. Facebook is entirely perceived value.

Sure they have around $4 billion in revenue. But to translate that to $100 billion in value?

RE: Over valued
By RicheemxX on 5/15/2012 11:16:59 AM , Rating: 2
Just another case of history repeating itself. There is no way anyone could justify that kind of valuation for FB. Much in the same there was no way they could justify some of the valuations some of the pre-bubble companies got and we all know how that worked out.

Kind of curious though, how this would stack against some of the industry giants if you factored inflation in. Where would Apple's IPO rank, Google, Yahoo ect.

RE: Over valued
By GotThumbs on 5/15/2012 1:47:48 PM , Rating: 2

This is a great opportunity for Zuckerman to grab for the money.

Facebooks single key asset is huge....if you are interested in tapping in to the worlds single largest marketing pool.

Since I don't FB, I'm not really interested. I see FB going the way of AOL neighborhoods and ICQ. Twitter is just another incarnation of AOL IM.

The "new" trend in "Cloud" computing is also old news...Google docs and for those of us with personal home servers...its very old news.

The general consumer population is just playing catch up to where many DailyTECH readers have been for some time.

RE: Over valued
By amanojaku on 5/15/2012 11:15:40 AM , Rating: 3
I think overvaluing companies is part of the culture of this generation's analyst. There was a time when valuation was very conservative, probably to avoid influencing investors. People are emotional: get them to think a stock is awesome and people might think it's awesome.

And this is FaceBook, so it just might be worth that much. People are willing to give up sex for this thing. Poor bastards...

RE: Over valued
By GotThumbs on 5/15/2012 1:54:10 PM , Rating: 2
Many people are letting emotions control thier investing. Its the same with buying a car....many consumers...mostly women (statistically proven) are driven by thier emotions...and not as much by the logical....thats why women tend to pay more for a car then men. Because its cute and they look good in it....forget about the monthly bill that eventually comes after the salesman is a faint memory.

There WILL be new investors....just so they can say they own FB stock.

RE: Over valued
By leviathan05 on 5/15/2012 11:25:16 AM , Rating: 2
Couldn't agree more.

This type of company, with very little IP and very few assets, is the kind that can disappear in the blink of an eye. There is also concern about how their revenue generating model will function as more members login through mobile devices, avoiding much of the advertising and drastically reducing paid clicks.

RE: Over valued
By rubbahbandman on 5/15/2012 11:17:19 AM , Rating: 3
It's overvalued except when you consider over 800 million people use the site regularly. The equity is in the userbase, even a company like Apple is technically overvalued when you compare it to big oil companies like Exxon although growth potential is naturally priced into stock valuations. In Facebook's case, the market will assume that Facebook will figure out how to monetize their site's traffic.

RE: Over valued
By lelias2k on 5/15/2012 11:42:29 AM , Rating: 2
Thank you!

The potential is there. Whether or not this will translate into something else is a different story, but speculation is the soul of a stock market anyway.

But I wouldn't doubt FB has already created more revenue than most people think. There are many companies doing a great job using it not only as a marketing tool but also for customer service.

RE: Over valued
By FITCamaro on 5/15/2012 12:43:40 PM , Rating: 2
Of course then you consider how many of those 800 million actually provide them any real revenue other than Facebook using their information to sell to marketing companies.

And I agree, Apple is WAY overvalued. Even with all the cash they have.

RE: Over valued
By iluvdeal on 5/15/2012 5:21:01 PM , Rating: 2
A 12 P/E is not overvalued. Stick to commenting on tech guys, your financial analysis is WAY lacking. Here's an article comparing FB to GOOG, AAPL:

RE: Over valued
By Mint on 5/15/2012 8:48:21 PM , Rating: 4
That would be true if the 12 P/E stayed that way for a decade. The reality is that it's really, really hard to maintain high margins in the tech industry unless you have some unmatchable IP/tech/marketshare, like Intel or Google.

Apple recently got some really fat margins on its iPhone and iPad sales, but they can't stay there forever especially now that everyone has caught up with smartphone packaging and Win8 tablets on the way.

Can they keep coming up with new gadgets that nobody else has thought of, while simply packing together parts from other manufacturers that anyone can get a hold of?

I doubt it.

RE: Over valued
By FITCamaro on 5/16/2012 8:23:20 AM , Rating: 2
I view Google and Apple as way overvalued as well. It's all on image. Nothing more.

RE: Over valued
By tng on 5/16/2012 8:25:37 AM , Rating: 2
That would be great if investment people really understood the tech industry, most really don't. Trends, PE ratios, current and rumors of upcoming products don't equate to understanding what the core of a company is.

FB is a company that has a product yes, but in the end it will only take one real issue to drive huge numbers of it's subscribers away. Look at what happened to Netflix practically overnight.

RE: Over valued
By steven975 on 5/15/2012 11:34:50 AM , Rating: 2
What is extremely worrisome is that this IPO is being marketed to the general public heavily.

This is usually a sign that the smart money has passed or has limited interest.

RE: Over valued
By leviathan05 on 5/15/2012 12:02:48 PM , Rating: 4
I'm not sure what you mean by marketed here, but if you think anyone in the public can get in on this IPO, that's actually not true. Unless you are part of the "public" that has a multi-million dollar investment account at one of the underwriting firms, you will not be a part of this IPO.

This IPO is so publicized because it is the largest in a long time and it revolves around a company that a large portion of the world's population is associated with.

RE: Over valued
By rubbahbandman on 5/15/2012 2:32:00 PM , Rating: 3
There is a very clear psychological connection to this strategy of marketing to the naive public. Generally what ends up happening is that "smart money" AKA the well-connected rich get first dibs on big IPOs (and believe me, in Facebook's case, they are all going to be at this party). Overnight the valuations will skyrocket and eventually the stock is open to the general public who buy in at a premium and the smart money take their profits and bail.

This happened over and over in the 90's with all the worthless dot com busts and if Facebook ends up being a bust it will surely happen again (although Facebook legitimately has a lot more going for it). Expect this IPO to be HUGE in the near term though, the problem is we don't get to be part of the party. At least Facebook has enough clout to raise their market valuation to over $100B. The "smart money" would much rather price them at half of that on their IPO and more than double their valuation on the first day of trading. They will still try though, it's just a lot harder to justify when the market cap is already this absurd... :)

RE: Over valued
By nolisi on 5/15/2012 12:21:43 PM , Rating: 2
This is the free market at work.

RE: Over valued
By MrBlastman on 5/15/2012 1:01:15 PM , Rating: 2
I wouldn't go far to say that--more like, this is the Analyst and Underwriter hype machine at full tilt. It is how the free market prints money, legally.

100 billion valuation for this company is asinine.

RE: Over valued
By Kurz on 5/15/2012 4:24:04 PM , Rating: 2
The only insitutions that can Print money is the Federal Reserve and the Banks. They can only print when they are making loans.

RE: Over valued
By FITCamaro on 5/15/2012 1:40:26 PM , Rating: 2
Where did I say it shouldn't be allowed? I was expressing my personal opinion on whether I think they're worth $100 billion.

337.4 million shares?
By althaz on 5/15/2012 10:54:37 AM , Rating: 2
337.4 million shares? Or $337.4 million WORTH of shares? Just curious as to which one you meant :).

I hate nitpicking, but I actually want to know, I'm assuming the former.

RE: 337.4 million shares?
By leviathan05 on 5/15/2012 11:19:13 AM , Rating: 2
Well, if the company is valued at $100 billion, and they sell 12.3% of the company, does that equal anywhere close to $337.4 million?


If you sell 337.4 million shares at ~ $36 per share, does that equal 12.3% of $100 billion?


Math and logic are your friends.

RE: 337.4 million shares?
By kattanna on 5/15/2012 11:39:07 AM , Rating: 2

speaking of math.. that dilbert cracks me up

RE: 337.4 million shares?
By deathwombat on 5/16/2012 3:47:44 PM , Rating: 2
I was thinking more of this one:

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