Update, April 14, 2016:
After Facebook, Inc. posted $896 million profit in third quarter of 2015, company surpassed the $300 billion mark in market capitalization and raised over $40 billion in one single day, overtaking General Electric (GE). In April 2016 Facebook Inc.’s market capitalization got another $40 billion to $340 billion after publishing positive revenue report.
Facebook Inc, a company created in 2004 Harvard dorm room, is set to raise up to $18.4 billion in its IPO and become the first U.S. company to be worth more than $100 billion at its debut, reports The Huff Post.
Facebook priced its flotation at $38 a share, that values the company at $104bn (£65.8bn) – more than any other US company has been worth on the day of its market debut.
According to The Telegraph, CEO Mark Zuckerberg will mark the start of trading by ringing the stock exchange’s bell from his California headquarters, where around a thousand Facebook employees are devoting the night to a “hackathon” – the sessions the social network runs when it wants to quickly develop a new product.
Valued at $104 billion, Facebook is larger than Starbucks Corp and Hewlett-Packard combined, and its offering is the largest by a U.S. Internet company and the second-largest in U.S. history after Visa Inc.
There are also speculation that Facebook’s IPO will create “1,000 millionaires.”
According to The Wall Street Journal, an engineer with 15 years experience hired by Facebook could buy 65,000 shares at $6 a share. After the 5-1 stock split in 2010, those shares would be worth $12 million at the expected valuation of $40 a share.
It sounds reasonable if to recall Google’s IPO in 2004. Press reports at the time claimed that the IPO “created more than 1,000 paper millionaires,” including a chef and a masseuse.
The IPO will give 28-year-old Zuckerberg a net worth of nearly $24 billion and control of around 56 percent of the company’s voting shares after the offering.
However, some investors worry that the majority control will give too much power to the ‘hoodie-wearing executive’ who wrote in a letter to potential shareholders that “we don’t build services to make money; we make money to build better services.”
Other investors express their concerns that the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones, writes Reuters.
Revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months. That led to General Motors announcement on Tuesday that it would stop placing ads on Facebook.
“A lot of people are thrown off by the recent negative stories in the press,” one UBS adviser said. “One guy was worried about General Motors stopping its advertising on Facebook.”
At the same time, some of Facebook’s biggest and earliest investors made last-minute decisions to sell more shares in Thursday’s IPO, growing concerns over their faith in the long-term value of the business.
“It indicates that in their minds Facebook has reached a peak, at least in the near-term,” said Sam Hamadeh, chief executive of US research firm PrivCo.
However, for a lot of retail investors, their first chance to invest in Facebook, which has some 900 million users, will be on Friday, when they risk getting trampled by institutional funds.
“A lot of retail investors are not concerned about valuation. That’s what is going to drive the first-day pop,” said Jim Krapfel, analyst at Morningstar. “I think anything over 50 percent will be considered a successful offering — anything under that would be underwhelming.”
Facebook already has 33 underwriters for the IPO, led by Morgan Stanley, JPMorgan and Goldman Sachs.