Facebook IPO Orders To Close Two Days Ahead Of Schedule

May 15, 2012
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Facebook will stop taking orders for its initial public offering (IPO) on May 16, two days ahead of schedule, but also has reportedly increased the IPO´s price range, which could give the social network a valuation of over $100 billion.

Facebook cofounder Mark Zuckerberg, who just turned 28, raised the price target from $28-$35 per share to $34-$38 per share in response to strong demand, according to a source familiar with the matter.

The increased price range would give the world´s largest social network a valuation of between $93 and $104 billion, rivaling the market capitalization of powerhouses such as Amazon and exceeding that of HP and Dell combined.

“Facebook´s pricing seems to be quite expensive,” said Yves Maillot, head of investments at Robeco Gestions SA in Paris, who helps oversee $6.8 billion. The IPO is also pressing ahead in a “very difficult environment for the U.S. equity market,”  he told Bloomberg reporters.

A source also told The Guardian that Facebook will likely finish taking orders for the IPO after US markets close on May 15, as the offer of 337.4 million shares at $28 to $35 each has been oversubscribed.

“They´re swamped with the orders that are in,” Jon Merriman, chief executive officer at investment firm Merriman Holdings Inc. in San Francisco, told Bloomberg. “They just need time to determine the price. They can send the message — the books are closing, send in your orders now.”

Even at the new mid-point of $36 per share, Facebook would raise more than $12 billion, overshadowing even Google´s IPO in 2004.

Wall Street experts expected the price range would be increased, with investors scrambling to grab a piece of the social networking pie. As the IPO nears, troves of investors are flocking in coast to coast for the Facebook IPO roadshow.

Rumors about exactly how easily Facebook will sell its shares have been churning since before the investor roadshow kicked off earlier this month. Demand has been seemingly strong, with more interested in buying than Facebook has to offer. Some reports, however, show that institutional investors are worried the site´s lack of a mobile strategy could damage the company´s value in the long run, and due to that, individual investors are likely to make up the bulk of share buyers.

Either way, Facebook is scheduled to officially price its shares on Thursday and then begin trading on Friday. The social network will be selling about 12.3 percent of the stake in its company.

Facebook´s shares will list on the NASDAQ stock exchange under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are the lead managers for the sale.

The higher price range was reported by CNBC earlier, citing sources familiar with the upcoming IPO.

A recent poll conducted by the Associated Press and CNBC may indicate that investors should be wary of putting too much into Facebook´s worth.

Nearly half of Americans in the poll believe Facebook is just a passing fad and that the asking price of its shares is way too high. Although nearly a third said the asking price was fair. Half of those surveyed said they felt Facebook is a good bet, and 31 percent disagreed. The rest were not sure.

Overall, the public is divided on the future of Facebook. About 46 percent of adults predict a short life for Facebook, while 43 percent believe it will continue to thrive.

What could be a downfall for Facebook is its revenue base. It makes most of its money selling ads and 57 percent of Facebook users say they never click on them; a further 25 percent said they rarely do.

The poll was conducted May 3-7, 2012 by GFK Roper Public Affairs and Corporate Communications and included 1,004 adults nationwide. The margin of sampling error was 3.9+/- percentage points.

Source: RedOrbit Staff & Wire Reports

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