Americas

Americas

Facebook sets 38-dollar share price for record IPO

18 May 2012 04:31 (UTC +04:00)

Baku-APA. Facebook on Thursday finalized the price at which it will offer its shares to the public for the first time on Friday in the largest ever initial public offering for a US technology company, APA reports quoting news.yahoo.com website.

The social networking giant said its eagerly anticipated IPO would be priced at 38 dollars per share - at the top end of the trading range announced earlier in the week.

The share price would value the company at around 104 billion dollars, making it easily the largest technology IPO in history and the third-largest ever in the US, following the 2008 IPO of Visa and the 2010 IPO of General Motors for the carmaker’s return to the stock exchange after bankruptcy reorganization.

Google, by comparison, raised just 1.7 billion dollars in its 2004 IPO, which valued the company at 23 billion dollars. The web software giant is now worth more than 200 billion dollars.

Facebook said that 241.23 million shares will go on sale on the NASDAQ under the ticker symbol FB. A further 63 million shares have been set aside for underwriters to cover allotments, the company said.

The stock price is expected to rise sharply in early trading as retail investors try to snap up Facebook shares, most of which have already been allotted to large institutional investors.

Financial analysts warn that the share price could quickly plummet if the company fails to increase its revenues by developing effective advertising products targeting its more than 900 million users.

That prognosis was reinforced Thursday when many of the company’s early investors said they were increasing the number of shares they were offering for sale, boosting the total shares on offer by some 25 per cent to 421 million shares from the previous figure of 337 million.

Altogether the shares to be sold by the company and private investors will raise 16 billion dollars, with a further 2.4 billion dollars coming from the over allotment tranche.

Facebook last year made a profit of 1 billion dollars on revenue of 3.4 billion dollars, but recently warned that profits might suffer because of a migration of users to mobile platforms, where advertising was less successful than on desktop computers.

Further doubt was sown Wednesday when auto giant General Motors said it was suspending its advertising on Facebook, citing low effectiveness.

The share launch will mark a personal triumph for Facebook chief executive Mark Zuckerberg, who launched the company in 2004 from his Harvard dorm room and who will still control some 57 per cent of Facebook’s voting stock. His share in the company will be worth more than 19.1 billion dollars.