Zuckerberg to ring IPO opening bell

2012-05-18 14:47

New York - Facebook founder Mark Zuckerberg will ring the opening bell on Friday as the social network he founded eight years ago in his Harvard dorm room makes its long-awaited Wall Street debut.

The company's stock, priced at $38 per share, was to begin trading under the symbol "FB" on the Nasdaq, giving the leading website a dizzying value of $104bn at its initial public offering (IPO).

Zuckerberg, Facebook's 28-year-old chief executive, will kick off the start of trading for the richest ever share offering for a technology firm by ringing the bell remotely from Facebook's headquarters in California.

Facebook is raising $16bn from the share offering, making it the richest IPO after financial giant Visa in 2008, according to Renaissance Capital. The addition of a possible stock "over-allotment" could boost the total to $18.4bn.

Facebook itself is selling 180 million shares and early investors in the company, which has grown from its humble Harvard origins into an online community of more than 900 million users, are selling 241 million.

With a market value of $104bn, Facebook would be among the most valuable US companies, ahead of sector giants Amazon ($98bn) and Cisco ($89bn), and more than twice the value of Ford Motor ($38bn).

But it remains behind Google ($203bn) and Apple ($495bn).

Facebook employees staged a software coding "hackathon" at the company's offices in the Silicon Valley city of Menlo Park overnight and were to continue until trading begins on Wall Street on Friday morning.

Under the share plan, Zuckerberg will hold 55.8% of the voting power of Facebook shares, and over 18% of the value of the company, which he controls through a dual class stock structure.

Wall Street and investors around the globe have been girding for a Facebook IPO frenzy over the past few days as Facebook boosted the estimated price for its shares and added to the number being offered by insiders.

Wedbush Securities analyst Michael Pachter said he believed that despite the large number of shares being offered, Facebook's stock price will climb quickly.

"I would guess it trades a lot higher, and settles in the mid-40s (dollars)," Pachter told AFP.

Betting firm Spreadex noted that among other tech IPOs, LinkedIn rose 109% the first day while Groupon surged 31%. Social game maker Zynga lost ground on its first day.

Lou Kerner, founder of The Social Internet Fund, said he expects a strong response.

"US institutional demand has been good, the retail and global demand has been overwhelming," he said.

London-based Hargreaves Lansdown Stockbrokers said Facebook may have a hard time living up to lofty expectations but pointed out that it is "a relatively developed company which can display 'real' income and profit."

"There are extremely high expectations for the company's prospects and perhaps on that basis it deserves the punchy valuation it has been given," the brokerage said in a note to clients.

But the brokers said Facebook faces challenges including how to make money from the growing base of mobile users.

The IPO's net proceeds to Facebook are estimated at $6.4bn. The rest of the cash goes to Facebook insiders and others who made early investments in the social network, and to cover the IPO costs.

The Wall Street Journal said 57% of shares will be from insiders, which is an unusually high percentage. Under Wall Street rules, investors have to wait six months to sell any shares not offered at the IPO.

Some analysts predicted Facebook's stock price would jump quickly to $44 a share but the long-term outlook is less clear.

At the heart of the debate about the wisdom of owning a piece of Facebook is how much revenue it takes in.

Revenue vaulted to $1.06bn in the quarter which ended March 31 - an improvement year-over-year but down about six percent from the previous quarter.

According to Experian Hitwise, received nine percent of all US Internet visits in April 2012. It had 1.6 billion visits a week and averaged more than 229 million US visits a day for the year-to-date.