Facebook Shares Will Open at $38 USD
May 17, 2012 6:20 PM
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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 --
-- 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
, according to experts. That's notably a higher valuation than the world's top online retailer, Amazon.com, Inc. (
) 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 (
) 2008 offering of $19.7B USD in stock and General Motors, Inc.'s (
) $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 (
) 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. (
) 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 (
) Paypal service. However,
concerns over privacy
remain active discussions and may make some investors cautious of diving in to the Facebook stock.
This article is over a month old, voting and posting comments is disabled
RE: Comparison with AMZN
5/18/2012 5:36:37 PM
Revenue growth isn't there, and profit margins most definitely aren't there to justify the stock price.
It is the strangest thing, investors treat Amazon like a tech stock when their business model is much much closer to a big traditional retailer such as Walmart's (make razor thin profits in order to maintain market share).
Fairly valued? We'll see, either they finally start making profits to justify the valuation or the stock price comes down accordingly.
RE: Comparison with AMZN
5/21/2012 1:22:18 PM
I agree. I don't see where AMZN is ever going to make huge margins. They basically are the next walmart and should be priced accordingly. Being the next walmart is actually a very enviable thing to be but it's not some sort of magical position to be in.
“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls
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