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  (Source: Getty Images/Justin Sullivan)
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 MrBlastman on 5/18/2012 11:47:43 AM , Rating: 2
That information is only as good as how current it is too. You're right, they hold quite a bit of their value in that information. The challenge is trying to monetize it in a timely manner before:

a. That information deteriorates and is less valid
b. Before users start leaving Facebook to the next big thing

They have a great asset. They need to capitalize on it now, not later. The problem is their growth is slowing, which is not something you want to see in this kind of company. Earning only a dollar per user isn't exactly making much off of it, either.

One other alternative way to value Facebook is to actually value that information--what could it be sold for today to another company--say a marketing company.


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