Facebook's record flotation to value company at up to $96bn
FACEBOOK has said it will be valued at up to $96bn (€73bn) when it sells shares to investors this month in a record-breaking flotation.
The eagerly awaited initial public offering could end up raising as much as $13.6bn for the company, its employees and existing shareholders, according to a filing made with US financial regulators on Thursday night.
The world’s largest social networking site is seeking to sell as many as 388m shares for up to $35 each, the top end of a range of $28 to $35 that it set out.
Although the initial valuation is just shy of the $100bn that had been mooted, the price the shares actually sell for could creep higher over the next fortnight.
Founder Mark Zuckerberg, whose stake could be worth up to $18.7bn based on the high end of Facebook’s range, and the company’s bankers, led by Morgan Stanley, will embark on a two-week long pitch to the potential investors over the next two weeks. The final pricing is expected on May 17, with the shares starting trading the next day.
The flotation will be the largest ever by an internet company, and Facebook’s valuation will dwarf that of many household names on Wall Street’s S&P 500 index.
Going public will also put new pressures on Mr Zuckerberg, who has in the past resisted pressure to float the company he founded while a student at Harvard University in 2004.
Facebook’s bankers have been deliberately conservative with the initial pricing range, said Sam Hamadeh, an analyst at PrivCo, to ensure the price climbs over the next fortnight and that the shares jump on their first day of trading on New York’s Nasdaq. They will trade under the symbol FB.
Mr Zuckerberg and chief operating officer Sheryl Sandberg will face some testing questions from investors, who are likely to be careful not to get swept up by the hype surrounding the biggest technology flotation since Google.
Despite Facebook’s profits more than tripling to $1bn over the past three years, there remain doubts about whether the social networking site can successfully squeeze more advertising profits from its pages without alienating the 900m users it has amassed around the world.
The company is also investing heavily in data centres and staff, which helped drive its first-quarter profits down by 12pc to $205m.
Facebook executives sought to allay fears over the company’s long-term growth on Thursday during a video presentation that pointed to plans to invest heavily in mobile.
Some investors have already said they will steer clear of the shares because Facebook’s dual-class share structure hands Mr Zuckerberg control of almost 60pc of voting rights at the company.
The founder is said to have only told his board about last month's $1bn deal to buy the photo-sharing site Instagram after negotiating it with the site’s founder.