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Facebook expected to raise price range ahead of IPO

Published: May 15, 2012 | 7:58 am
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Sources say social network has raised price target to $34-$38 a share, potentially valuing the company at more than $100bn

Facebook has reportedly increased the price range in Silicon Valley’s biggest-ever initial public offering to raise more than $12bn (£7.4bn), giving the social network a valuation potentially exceeding $100bn.

The company founded in a Harvard dorm room by Mark Zuckerberg, who turned 28 on Monday, raised the price target to $34-$38 a share – up from $28-$35 – in response to strong demand, according to sources.

That would value Facebook at roughly $93bn to $104bn, rivaling the market capitalisation of internet powerhouses such as Amazon and exceeding that of Hewlett-Packard and Dell combined.

At the mid-point of $36, Facebook would raise $12.1bn, eclipsing Google’s debut in 2004.

Wall Street had expected the company to increase the price range, with investors keen to get a slice of a strong consumer brand. The IPO roadshow began last week and has drawn crowds of investors from coast to coast.

Facebook plans to close the books on its IPO on Tuesday, two days ahead of schedule, and in a signal that the landmark initial share sale is drumming up strong demand, a source told Reuters.

The social network is scheduled to price its shares on Thursday, then begin trading on Friday.

The IPO is already “well oversubscribed,” which is why the company is closing its books earlier than anticipated, the source said.

Facebook plans to sell 337.4m shares, or 12.3% of the company. The capital-raising target far outstrips other big internet IPOs.

Google raised just shy of $2bn in 2004, while last year Groupon tapped investors for $700m and Zynga raked in $1bn.

The higher price range marks an increase of 21% on the lower end. A hike of more than 20% typically means the company would have to file an amendment with the Securities and Exchange Commission.

Company spokesman Jonny Thaw declined to comment on Monday.

The IPO comes amid concerns from some investors that Facebook hasn’t yet figured out a way to make money from an increasing number of users who access the social network on mobile devicess.

Facebook will continue with its roadshow for the rest of the week, said a source, and investors who have not yet attended a roadshow presentation will still be able to place orders.

Company executives met with prospective investors in Chicago on Monday and are slated to travel to Kansas City and Denver, before returning to Menlo Park, California, where Facebook is headquartered.

A host of Wall Street banks are underwriting Facebook’s offering, with Morgan Stanley, JPMorgan and Goldman Sachs serving as leads. Facebook will trade on Nasdaq under the symbol FB.

CNBC reported the higher price range earlier, citing sources.

guardian

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