NEW YORK—In a much-awaited announcement, social networking giant Facebook Inc. set the price of its initial public offering (IPO) of stock to $28–$35 per share on Thursday.
At these prices, the upper range of the IPO will now raise around $13.6 billion for the Palo Alto, Calif.-based company, far exceeding the previous estimates of $5 billion in capital. As a result, this IPO is expected to be the biggest one ever for an Internet company.
A total of 337.4 million shares will be sold in the IPO. Facebook has around 2.14 billion shares in total, but that number increases to 2.74 billion with restricted stock and options included. If the price per share comes out to $35, the company would be valued at almost $96 billion. When Google went public in 2004, it raised $1.9 billion and was valued at around $23 billion.
The projected Facebook figures could still change, as the company may modify its IPO price right up to the night before trading begins. Facebook’s shares are expected to begin trading in mid-May, with May 18 a widely anticipated date. The company will trade under the symbol “FB” on the New York-based Nasdaq Stock Exchange.
Facebook’s 27-year-old CEO Mark Zuckerberg said that he would sell 30.2 million of his own shares in the IPO, which could net the billionaire around $1 billion in proceeds, if the shares sell at the top of the current IPO range.
Facebook has over 900 million users worldwide, but analysts have questioned the company’s wherewithal to monetize its user base in terms of revenues. Experts say that if Facebook starts bombarding users with ads, it could risk alienating its user base.
The company’s offering has been the most widely anticipated technology IPO in the last several years. The last major Internet IPO was that of Zynga Inc., a maker of online social games. Zynga raised $1 billion in December 2011.
In its latest SEC filing, Facebook reported $3.71 billion in revenues, mostly from advertising, and $1 billion in net income. According to a Reuters report, Facebook executives will go on a pre-IPO roadshow beginning on Monday to promote the company’s stock to institutional investors. This is standard practice for a company prior to an IPO.