Thu May 17, 2012
Facebook Stock Priced at $38 A Share Ahead of Friday IPO
Originally published on Fri May 18, 2012 5:55 am
When Facebook makes its initial public offering Friday on the NASDAQ, the stock will be priced at $38 per share, a price that's expected to bring in between $16 billion and $18.4 billion to the company. CNBC reports:
"[The price makes] it one of the most lucrative offerings the Street has ever seen. With that valuation taken into consideration, Facebook goes public with the highest valuation — in the $100 billion range — of any company on record at the time of its IPO."
The price is on the higher end of analysts' expected range of $34 to $38.
Facebook CEO Mark Zuckerberg, who just turned 28 this week, wrote a frank letter to potential investors to affirm the company's social mission even as it prepares to ask Wall Street for billions. Zuckerberg said, "[Facebook] was built to accomplish a social mission—to make the world more open and connected."
What does a company's public offering with one of the highest valuations in history mean for you? Slate's technology writer Farhad Manjoo says to expect more ads. A lot more ads:
"To justify Facebooks' $100 billion valuation, investors are going to expect amazing growth in its revenues—something on the order of 25 to 30 percent per year, according to analysts. At the moment, Facebook makes nearly $5 in revenue per user per year, and just $1 in profit per user per year. Because it will be difficult for Facebook to attract far more than a billion users—there are only so many Internet-enabled people on earth—its revenues must grow by selling each user for more money to advertisers."
Not every investor will be eligible to purchase Facebook stock tomorrow. Most of the big underwriters have minimal account requirements that must be met to place a buy during the IPO phase.
"Most shares will go to big institutional investors or wealthy brokerage customers instead of retail investors," reports the Los Angeles Times.