Facebook is valuing itself at as much as $96 billion in its initial public offering, the largest on record for an internet company.
Facebook Valuing Itself at Up to $96 Billion in IPO
Facebook and its holders plan to sell about 337.4 million shares at $28 to $35 each, according to a regulatory filing today. At the top end of the range, the company would raise $11.8 billion, compared with the 2.92 billion euro ($2.8 billion) IPO for German internet company T- Online International AG in 2000, according to data compiled by Bloomberg.
Facebook's popularity as a tool for staying connected online will spur demand for the stock, even as some investors steer clear of a valuation they deem too high, said Francis Gaskins, president of researcher IPOdesktop.com. "Some people will buy Facebook stock no matter what -- they'll just buy it," said Mr. Gaskins, who is based in Marina Del Rey, Calif. "There's going to be an initial push of enthusiasm and money, but ultimately, in a year or so, it will come down to valuation metrics. It has to."
Facebook has amassed more than 900 million users and reported a 24-fold increase in sales over the past four years. The company was considering an IPO valuation of as high as $100 billion, people with knowledge of the matter have said. At that amount, Facebook would have a market capitalization about half as high as Google's -- even though it has one-10th the sales.
Facebook is offering 180 million shares, while existing owners such as Accel Partners and Digital Sky Technologies are offering 157.4 million, according to the filing. Zuckerberg is offering 30.2 million of his 533.8 million of shares. The majority of his net proceeds will be used to pay taxes associated with exercising a stock option.
Facebook will have 2.14 billion Class A and B common shares outstanding following the IPO, equal to a value of $75 billion at the top end of the price range. Including restricted stock units, options and common stock to be issued following the purchase of Instagram Inc., the shares outstanding would total 2.74 billion, implying a market value of $96 billion at the high end.
Facebook filed for the IPO Feb. 1, using a placeholder amount of $5 billion. Mark Zuckerberg, a co-founder, is the company's top holder, filings show. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are leading Facebook's IPO. The shares will be listed on the Nasdaq Stock Market under the symbol FB.
The initial share sale would dwarf the 2004 IPO of Google, Facebook's biggest competitor for online ads and the world's most valuable internet company.
Google's offering, the same year Mr. Zuckerberg helped found Facebook, raised $1.9 billion and valued the company then at about $23 billion. The company currently has a market value of almost $200 billion.
Facebook follows fellow internet companies such as Zynga Inc. and Groupon Inc. in going public. Zynga, the maker of internet games such as "Farmville," raised $1 billion in its December IPO, while online-coupon provider Groupon raised $805 million, including an overallotment option, in November. Both stocks are trading below their offer prices.
Facebook's revenue surged 88% last year to $3.71 billion, with online advertising accounting for almost all of it. The company also is sharpening its focus on the mobile market as users spend more time accessing the site through internet-ready handheld devices such as the iPhone. In the first quarter of 2012, sales climbed 45% to $1.06 billion.