Facebook prices at top of range in landmark IPO
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Facebook Inc priced its initial public offering at $38 a share, giving the world's No. 1 online social network a $104 billion valuation in the third largest offering in U.S. history.
The offering puts the eight-year-old company, founded in a Harvard dorm room, a valuation akin to that of Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.
Predictions on how much the stock will rise on the first day of trading vary greatly, with some experts saying anything short of a 50 per cent jump would be disappointing. Other IPO watchers say the large size of the float, coupled with a raised price range, could reduce first-day gains to as little as 10 per cent.
"I think anything over 50 per cent will be considered a successful offering - anything under that would be underwhelming," said Jim Krapfel, analyst at Morningstar.
"A lot of retail investors are not concerned about valuation. That's what is going to drive the first day pop."
Lee Simmons, industry specialist at Dun & Bradstreet, had a more modest forecast.
"You've got a large offering at an increased price, so a huge pop may be difficult to achieve. I'd think a 10 to 20 per cent pop over the offer price is expected," Simmons said. "When you're talking about doubling or a pop the size of LinkedIn, it's more difficult to achieve because Facebook is just offering more shares ... The others were smaller floats, under 10 per cent, so you had this artificial feeding frenzy."
Shares of professional networking company LinkedIn Corp's doubled on their first day of trading.
On Wednesday, Facebook increased the size of the IPO by almost 25 per cent to 421 million shares, a 15 per cent float.
Another social media company, Zynga Inc, an online games developer that makes lots of games for Facebook users, fizzled in its debut and ended down 5 per cent on its first day of trading. No one Reuters spoke with said they were expecting a fall in Facebook's stock on Friday.
Facebook, with some 900 million users, raised the target IPO price range on Tuesday to between $34 and $38 per share, from between $28 and $35.
The company could raise north of $18.4 billion if a greenshoe option for underwriters is exercised.
Facebook will celebrate its Wall Street debut with an all-night "hackathon" at Facebook's Menlo Park, California, headquarters starting on Thursday evening, a company tradition in which Facebook's computer programmers work on side projects that sometimes become part of the main product offering.
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