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Company is estimated to be worth around $107B USD, including unexercised share options

Facebook -- the world's most used website and the largest social network in the world -- is on the eve of its initial public offering of stock.

The price of shares -- $38 USD -- was just announced.  That places Facebook's tenative market capitalization at $81B USD, more than some expected.  Combined with executives unexercised share options, the company's total valuation appears to be around $107B USD, according to experts.  That's notably a higher valuation than the world's top online retailer, Amazon.com, Inc. (AMZN) who "only" has a current market cap of $98.4B USD.

The IPO will raise $16B USD, based on the announced share price.  The IPO is the third largest in U.S. history, behind only Visa Inc.'s (V) 2008 offering of $19.7B USD in stock and General Motors, Inc.'s (GM) $18.1B USD post-bankruptcy stock offering.

Shares will trade under the symbol "FB".  It is unlikely that many shares will reach the hands of small independent traders; the IPO is underwritten by finance house Morgan Stanley (MS) and most shares will go to large institutional investors, mutual funds and hedge funds.  This is different from other top tech IPOs of the past, such as Google, Inc. (GOOG) who sold directly to individual investors via a "Dutch auction" process.

The expected offering date is May 18, pending approval by the U.S. Securities and Exchange Commission.

The stock offering is destined to transform Facebook's early investors and founding members into multi-millionaires, if not billionaires.  Facebook's co-founder has reportedly abandoned his U.S. citizenship in order to avoid paying much of the taxes on the windfall that will be coming his way.  Iconic co-founder Mark Zuckerberg remains a U.S. citizen and has pledged to give away his fortune to charity when he dies, as suggested by his mentor, Bill Gates.

Facebook is a company of much controversy and potential.  Some believe it could increase profits by a substantial multiplier if it jumped into the online payments business as a competitor to eBay, Inc.'s (EBAY) Paypal service.  However, concerns over privacy and censorship remain active discussions and may make some investors cautious of diving in to the Facebook stock.

Source: CNN Money



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RE: Comparison with AMZN
By mcnabney on 5/18/2012 9:56:57 AM , Rating: 2
That logic of a ludicrously high PE works for small, up and coming companies. Not so much with a mature and well known one. Just because everyone has heard of something doesn't mean that they are going to give you a ton of money. Remember, this IPO values FB higher than Disney, which is a mammoth company with holdings as diverse as a TV network, cable channels, theme parks, Pixar + their own production studio, theme parks, and a catalog of IP dwarfing all others. Facebook is a place where people play casual games, check out past girlfriends, and tell mom that the kid is riding a bike without training wheels.


RE: Comparison with AMZN
By skirvmi on 5/18/2012 10:15:03 AM , Rating: 2
The value of a company is more than its assets and earnings. The brand itself has value. Removing all assets, how would you value a company like Coke simply on the brand? While this is part of it, Facebook's value is based largely on the information they posses. Detailed information about peoples preferences, locally, nationally, and globally would be worth a huge amount of money for people producing and marketing products. To me, this is why there is such a buzz around Facebook. It will be interesting to see how much the market thinks this information is worth.


RE: Comparison with AMZN
By mcnabney on 5/18/2012 3:08:51 PM , Rating: 2
Uhm, brand value is actually recorded in a company valuation as goodwill. For Facebook, a $108B market-cap would imply goodwill of over $100B. Insanity. And I thought that Amazon was insanely priced.


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