Facebook’s IPO Already Oversubscribed, Source Says

Facebook Inc’s record initial public offering is already oversubscribed, a source familiar with the share listing revealed.

Despite a wave of speculations about slowing growth, a high valuation and signs the company has problems with mobile advertising, institutional investors have so far indicated demand for more shares than Facebook has available. Photo: Jeremiah Owyang/Flickr

According to analysts, the company, which is seeking to raise about $10.6 billion by selling more than 337 million shares at $28 to $35 a piece, may increase that price tag in case demand is healthy enough.

It was found out that one large institutional investor had put in a major order for shares on Wednesday and was calling around syndicate desks trying to acquire more, a second source familiar with the IPO’s progress revealed to Reuters.

The social network created in Mark Zuckerberg’s Harvard dorm room is expected to begin trading on May 18 after an IPO that dwarfs the coming-out parties of other tech powerhouses.

Facebook with 900 million users is challenging established Web businesses such as Google and Yahoo Inc for consumers’ online time and advertising dollars.

However, experts suggest that Facebook needs to find a new way to get money from the increasing number of users who access the social network on mobile devices such as smartphones.

The social networking site, which receives huge sum of money from advertising, began offering limited ads on the mobile version of its service only recently.

By the way, yesterday Facebook team announced the App Center which may take a chunk out of Apple and Google’s mobile market share.

As CBS News reports, Facebook App Center will list apps that can be installed on Facebook. The biggest change is the move to mobile.

“The App Center is designed to grow mobile apps that use Facebook – whether they’re on iOS, Android or the mobile web. From the mobile App Center, users can browse apps that are compatible with their device, and if a mobile app requires installation, they will be sent to download the app from the App Store or Google Play,” Facebook software engineer Aaron Brady explained in a blog post.

One more change is that Facebook will now let developers offer paid apps – meaning, users will pay to install certain apps. Originally, the social network’s apps have had success with in-app purchases. Zynga’s FarmVille is a prime example of how app developers have been able to monetize free Facebook apps.

“Many developers have been successful with in-app purchases, but to support more types of apps on Facebook.com, we will give developers the option to offer paid apps. This is a simple-to-implement payment feature that lets people pay a flat fee to use an app on Facebook.com,” Brady added.

Saverio Romeo, an industry analyst from Frost & Sullivan, suggested that the novelty would provide an aggressive push by Facebook to become a bigger player in mobile.  He said Facebook needed to become “more significant, to attract more ideas and get more experience in the mobile space”.

“I think the store is an important element – a community of developers is a fundamental element in the growth we have seen with Apple and Android,” he told the BBC.

“Many developers have been successful with in-app purchases, but to support more types of apps on Facebook.com, we will give developers the option to offer paid apps. This is a simple-to-implement payment feature that lets people pay a flat fee to use an app on Facebook.com,” Brady added.

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