When Facebookgoes public later this month, it will make the eight-year-old company the most valuable tech entity in the U.S. With shares priced between $28 to $35, the value is expected to be as much as $96-bln.
Of course the pricing is subject to change from the investor roadshow, which begins next Monday. But many expect this to be a smooth sail, despite decline in first quarter performance (if you are the hottest IPO of the decade, you can get away with pretty much anything).
In a recent announcement, Facebook reported that it is looking into incorporating smaller investors into their IPO, traditionally a realm reserved for underwriting banks.
The company has announced that 337.4 million shares will be for sale during its initial public offering, raising an upwards of $13.6-bln for the company, more than the expected $10-bln. The only two other IPOs in recent memory to have raised more money than Facebook are Visa ($19.7-bln in 2008) and General Motors ($18.1-bln, 2010).
Founder and CEO Mark Zuckerberg will personally pocket some 30.2 million stakes worth $18.7-bln, $1-bln of which will be put towards paying taxes on the company. He will still be left with as much as $17.6-bln, and retain approximately 57.3 per cent of voting power.
According to the Wall Street Journal, Facebook’s IPO establishes the company on par with more traditional corporations such as Amazon Inc. and McDonald’s Corp. despite “having a fraction of the revenue — or profit.” The close to $100-bln valuation is also far above the second highest IPO on record: Google’s 2004 IPO at $23-bln. It also breaks the record as the largest valuation by a U.S. company, a position previously held by United Parcel Service in 1999 ($60.2-bln).
This signals a new era in the tech industry. Those made millionaires in this IPO will provide the infusion of cash needed in future research and development. Some peg the company to be worth as much as $200-bln in four years time.
Facebook was founded by the 27-year-old Mark Zuckerberg in his dorm room at Harvard University in 2004. Since then, it has grown to 526 million users daily in just eight years. The company will begin trading on the Nasdaq exchange using the ticker symbol FB.
_____
May Jeong is Toronto Standard’s business editor. Follow her on Twitter @mayjeong.
For more, follow us on Twitter at @torontostandard, and subscribe to our newsletter.
