Facebook prices $38 a share at top of range in landmark IPO

6cedfcf44152286d91296338d0ad5c29

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 percent 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 percent.

“I think anything over 50 percent 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 percent 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 percent, 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 percent to 421 million shares, a 15 percent 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 percent 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.

SPORTS BOOKS AND ODDSMAKERS

Despite the high expectations, Facebook faces challenges maintaining its growth momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

Sports betting firms had varying estimates of where Facebook would end up at the close of its first day of trading. Spreadex Limited in the UK said clients are speculating shares could end up trading above $56 a share in the first day, having come down a bit in price since the number of shares slated for sale was increased.

Betting on Intrade, a popular online betting site for political events, was limited, with only about 750 shares changing hands in contracts that bet on a closing price anywhere from $25 to $60. By contrast, more than 200,000 trades have been made on President Barack Obama’s chances for re-election.

“Hundreds of millions of people are extremely passionate about this product. A lot of those people want to be a part of this event, of this company that they have an affinity for. That’s creating a level of excitement for the stock that you don’t normally see,” said Steve Weinstein, an analyst with ITG Research.

Some financial advisers have warned their clients against jumping into Facebook right away, but the well-known brand could still attract enough interest to exceed the 458 million shares traded the day General Motors went public after emerging from bankruptcy in 2010.

One UBS adviser initially received calls from 12 clients clamoring to buy shares of Facebook, but over the past couple of

weeks, two have changed their minds.

“A lot of people are thrown off by the recent negative stories in the press,” the adviser said, speaking on condition of anonymity. “One guy was worried about General Motors stopping its advertising on Facebook.”

GM said on Tuesday it would stop placing ads on Facebook, raising questions about whether the display ads on the site are as effective in reaching consumers as traditional media.

Overall financial advisers are struggling to manage clients’ expectations about what the stock will do and in some cases, if they will be able to get any stock for them.

“People want to just own it because they think it’s the next Google and they missed out on that,” said a financial adviser from Wells Fargo Advisors, the brokerage division of Wells Fargo & Co, which is part of the syndicate underwriting the deal.

Facebook has 33 underwriters for the IPO, led by Morgan Stanley, JPMorgan and Goldman Sachs.



News
Entertainment
Sports
Lifestyle
Local

Girl, 10, dies after being pulled from water…

A 10-year-old girl died after being pulled from the waters off Coney Island Beach in Brooklyn on Tuesday night, police said.

News

NY judge throws out lawsuit by Empire State…

A New York state judge has thrown out a lawsuit in which longtime investors in the Empire State Building claimed they were shortchanged out of hundreds of millions of dollars…

Local

Mysterious white flags appear over Brooklyn Bridge

Two white flags mysteriously appeared over the towers of the Brooklyn Bridge yesterday in place of the American flags that are a traditional fixture.

National

Judge sets January start for murder trial of…

By Elizabeth BarberBOSTON (Reuters) - Former New England Patriots player Aaron Hernandez will be tried in January for the murder of semi-professional football player Odin…

Television

'Pretty Little Liars' recap: Season 5, Episode 7,…

Drunk girls and ghost brownies: here’s your weekly ‘Pretty Little Liars’ recap by way of Q&A. Q: do they really not check for feet under…

Arts

Don't miss 'Charles James: Beyond Fashion' at the…

Have you been meaning to see "Charles James: Beyond Fashion"? There are only two weeks left to get to the Met and catch this amazing American fashion designer's collection.

Television

Zac Posen talks 'Project Runway' and what it…

We talked to Zac Posen, judge and designer extraordinaire, about the new season of "Project Runway" and what keeps him coming back after three seasons.

Television

'Face Off' contestant David 'DOC' O'Connell sounds off…

David "DOC" O'Connell tells us about getting cast on Season 7 of Syfy's "Face Off," premiering tonight at 9.

NFL

David Tyree hiring has gay rights advocates angry

Former Giants Super Bowl hero David Tyree will re-join the franchise as its new director of player development.

NFL

Ben McAdoo's new offense has Giants excited to…

Even Tom Coughlin feels he has a lot to learn about offensive coordinator Ben McAdoo’s new offense, which makes the veteran coach very excited.

MLB

MLB Power Rankings: A's, Angels, Dodgers, Brewers lead…

MLB Power Rankings: A's, Angels, Dodgers, Brewers lead pack

NFL

2014 NFL season betting odds: Which team will…

2014 NFL season betting odds: Which team will win Super Bowl?

Tech

Learn Braille with these gloves

U.S. scientists have designed high-tech gloves to help users understand Braille in a matter of minutes.

Home

5 New Ikea products that will change your…

We round-up the latest must-have products.

Food

Recipe: Wolfgang Puck's Buttermilk French Toast

We recently spent some time chatting with restauranteur/celebrity chef Wolfgang Puck at his Wolfgang Puck American Grille in the Borgata in Atlantic City. Puck wanted…

Style

Go retro with your sneakers

The best of wacky new sneakers.