A frenzy for Facebook built Tuesday as the company hiked its expected opening price for shares to about $38 — making the eight-year-old social media site worth $104 billion.
The staggering sum set ahead of Friday’s hotly anticipated IPO would instantly make Facebook more valuable than American corporate icons like McDonald’s, Disney and Kraft.
“There are more than 2 billion global Internet users,” Facebook said grandly in its SEC filing, “and we aim to connect all of them.”
RELATED: WHAT YOU NEED TO KNOW ABOUT FACEBOOK'S INITIAL PUBLIC OFFERING
By August, the social network is expected to sign up a billion people — one of every seven humans on the planet.
That staggering reach, and investors’ everyday familiarity with the product, was fueling an unprecedented appetite for shares.
“Some investors are just captivated with the idea of owning Facebook,” said Dan Veru, chief investment officer at Palisade Capital Management.
Analysts said the initial offering of 337.4 million shares was already vastly oversubscribed and advance orders were being cut off.
But late Tuesday reports emerged that Facebook would increase its offering by 85 million shares, bringing the total to more than 420 million shares.
With an increase in size, the IPO could raise more than $18 billion for Facebook, more than 10 times the $1.67 billion Google raked in when it went public in 2004.
Existing stockholders — Facebook employees and venture capitalists who invested early — stand to make as much as $6 billion.
Wealth managers say there could easily be 500 to 1,000 new millionaires in America by the close of business Friday.
That’s on paper, though: Facebook employees will have a 90- to 180-day “lockup” period in which they can’t sell their shares, to prevent the market from being flooded.
By the time they can sell, the stock may no longer be flying high.
General Motors threw a last-minute splash of cold water on expectations Tuesday.
The auto giant’s executives reportedly decided to yank their relatively small $10 million ad campaign from the site for a very big reason: They said Facebook ads don’t work.
Selling ads is the prime source of income for Facebook, but a majority — 57% — of Facebook users in a new AP-CNBC poll said they never click on any of the site’s ads.
The same poll found that half of Americans think Facebook is a passing fad that won’t be around in a few years.
But that ambivalence appeared at odds with the growing hoopla around Friday’s start of public trading in the company’s shares.
Analysts expect huge volatility when shares begin trading under the ticker symbol FB on Friday.
Regular Joe investors will have a hard time buying FB at the opening price.
Most of the shares on offer are already earmarked for investment banks, company insiders, institutional investors and preferred clients.
Once the stocks begin trading Friday, anyone can buy — but by then, it may no longer be a good buy.
Excitement and hype can send a new stock soaring into the stratosphere. Then the well-connected investors pull out, and the price crashes back to earth, leaving ordinary investors holding the bag.
The last frenzied tech IPO was Groupon, which went public six months ago at an opening price of $20. The stock soared as high as $31 on the first day, but plunged to $15 in days.
It closed Tuesday at $12.
Mark Zuckerberg, the Dobbs Ferry, Westchester, dentist’s son who started the website in his Harvard dorm room just eight years ago, will ring the Nasdaq’s opening bell Friday.
By Friday night, the 28-year-old will be worth about $24 billion.
That would make him approximately the 15th richest man in the world, on par with Mayor Bloomberg, but trailing the likes of Bill Gates ($69 billion) and Warren Buffet ($44 billion.)
Donald Trump had some practical advice for him Tuesday.
“I hope Mark Zuckerberg signs a prenup with his current girlfriend — perhaps soon-to-be wife. Otherwise, she can walk away with 9 billion,” Trump tweeted.
Read more: http://www.nydailynews.com/news/national/facebook-ipo-plan-stands-rake-100-billion-mint-billionaires-article-1.1078983#ixzz2CNpBGWIL
1 comments:
sing up
Post a Comment