Facebook’s Record Flotation to Value Company at Up To $96 Billion

Facebook, the social network giant, is worth as much as $96 billion, according to the price range for its upcoming initial public offering of stock.

Facebook has said it will be valued at up to $96bn when it sells shares to investors this month in a record-breaking flotation. Photo: West McGowan/Flickr

The long awaited initial public offering could end up raising as much as $13.6bn for the company, its employees and existing shareholders, according to The Telegraph.

Facebook’s IPO is to become the biggest ever for an Internet company. The company revealed the price range of $28 to $35 per share in a regulatory filing Thursday.

Despite the initial valuation is just shy of the $100bn that had been predicted, the price the shares actually sell for could creep higher over the next two weeks.

“We certainly haven’t ever seen a tech IPO on this grandiose a scale,” said Lise Buyer, a principal with the IPO advisory firm Class V Group.

The Huffington Post writes that Facebook and its shareholders could raise as much as $13.58 billion – it is far more than the $1.9 billion raised in the 2004 offering for current Internet IPO record-holder Google Inc.

“People are going to be very comfortable with this valuation,” said Sam Schwerin of Millennium Technology Value Partners.

“A price range of $28 to $35 will be a relief to some people who are concerned that they may try to take the highest possible price because of high demand. The amount being raised is noteworthy. Selling stockholders are raising about $5 billion in the IPO, which is a lot,” he said.

Founder and CEO Mark Zuckerberg’s stake could be worth up to $18.7bn based on the high end of Facebook’s range.

Mark Zuckerberg will continue to keep control over the company after the IPO. Zuckerberg will control 57.3 percent of the company’s voting power. This means the CEO will have final say over the biggest decisions facing the company even after it goes public.

However, going public may put new pressures on Zuckerberg, who has in the past resisted pressure to float the company he founded in 2004 while a student at Harvard University.

According to Reuters, Facebook executives are to hit the road on Monday to presedt their investment case to audiences.

Starting in New York, then they will go to other major cities such as Chicago and Boston, and end up on Facebook’s home turf in Menlo Park, California.

Mark Zuckerberg is expected to participate in the two-week road show, but Chief Operating Officer Sheryl Sandberg and Finance Chief David Ebersman will lead the briefings.

Facebook posted a version of its road show online on Thursday, with appearances from Zuckerberg, Sheryl Sandberg; finance chief David Ebersman and other executives.

“We think people’s lives will be better and really that the whole world will function better when there is more information and understanding out there,” Zuckerberg says in the video.

At the top end of the IPO range, Facebook would rival the market value of Amazon.com and Cisco Systems Inc, which are worth just over $100 billion, and surpass the combined market value of older technology companies Hewlett-Packard Co and Dell Inc.

The IPO would put Zuckerberg, who will likely own about 31.5 percent of Facebook’s outstanding stock, at around No. 33 of the Forbes list of the world’s richest people, above the likes of Dell Inc. CEO Michael Dell and Microsoft Corp. CEO Steve Ballmer.

Zuckerberg plans to use the proceeds to cover taxes. Other stockholders offering shares include early investors such as James Breyer of the venture capital firm Accel Partners, who’s offering 38.2 million shares. Peter Thiel, a PayPal co-founder-turned venture capitalist who first invested in Facebook in 2004, is offering 7.7 million.

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