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

Brooklyn man charged in roommate's stabbing death

A Brooklyn man accused of violently stabbing his roommate to death on Monday is in police custody and faces murder charges.

International

Dinosaurs could have survived asteroid strike

It turns out there is a good and a bad time for the planet to be hit by a meteor, and dinosaurs were just unlucky.…

National

OkCupid admits to Facebook-style experimenting on customers

By Sarah McBrideSAN FRANCISCO (Reuters) - OkCupid, a top U.S. matchmaking website, intentionally mismatched users to test its technology, the IAC/InterActive Corp service said on…

Local

MTA fares still increasing 4 percent in newly…

The agency said the 4 percent increases, previously announced in December, will remain steady even as the MTA deals with increasing labor costs.

Movies

Interview: Brendan Gleeson on the way 'Calvary' depicts…

Brendan Gleeson talks about how his new film "Calvary" began over drinks and how his character here is the opposite of the lead in "The Guard."

Movies

'Get on Up' producer Mick Jagger on the…

Mick Jagger, a producer on the James Brown biopic "Get on Up," talks about the time had to tell the singer some bad news and his favorite JB record.

Television

'Glee' star Lea Michele to appear on 'Sons…

"Glee" star Lea Michele has been confirmed as a guest star in the final season of "Sons of Anarchy."

Television

TV watch list, Monday, July 28: 'The Bachelorette'…

See Andi Dorfman make her big choice on tonight's 'Bachelorette' finale.

MLB

Angelo Cataldi: Ryan Howard deserves better from Phillies

Just last week, Ryan Howard endured the embarrassment of a benching that was inevitable, and yet still shocking.

NFL

Larry Donnell has inside track in Giants tight…

Little-known Larry Donnell of Grambling State currently has the inside track, as the second-year player has received the bulk of the first-team reps.

NFL

Computer to Jets: Start Michael Vick over Geno…

Jets general manager John Idzik says the choice of who starts between second-year quarterback Geno Smith and veteran Michael Vick will be a “Jets decision.”

MLB

Yankees looking to trade for Josh Willingham: Report

CBS Sports’ Jon Heyman reported Sunday the Yankees are interested in Twins outfielder Josh Willingham.

Travel

Glasgow: Hey, hey, the gangs aren't here

This European city has done a good job getting rid of its more violent residents and revitalizing with artists.

Education

Babson College tops list of best colleges for…

Money magazine has just released its inaugural list of "The Best Colleges for Your Money" -- and the answers have surprised many. Babson College, which…

Education

NYC teens learn how to develop apps during…

Through a program sponsored by CampInteractive, the high schoolers designed their own community-focused apps.

Tech

The Ministry of Silly Walks app is both…

Monty Python have dug into their back catalogue for cash-ins once more, but with the Ministry of Silly Walks app, they've made something that's fun too.