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
National

Bloomberg: Going green will grant you longer life…

Former NYC mayor Michael Bloomberg tells Metro that cities are where fighting global warming can make a difference, and increase people’s lifespan.

International

Ban Ki Moon: "Climate change is an issue…

My message to you is: make your voice heard and your actions count. Change is in the air. Solutions exist. The race is on. It’s time to lead.

Local

Earth Day New York food toolkits to help…

Hundreds of classrooms across New York City already have indoor container gardens that allow students to grow food right where they learn. But Earth Day…

Local

NYPD announces street closures for United Nations General…

The United Nations representatives are in town, and multiple city streets will be closed to traffic through Saturday, Sept. 26. The NYPD is urging those…

Television

10 Facts you won’t learn about Frankie Grande…

Frankie Grande is the worst and/or the best. Whether or not you're a fan, you'll want to know these facts about the polarizing player from "Big Brother 16."

Movies

Antoine Fuqua can kill someone with just a…

It's amazing what you can get done with the right tools. In designing the climactic battle in "the Equalizer," in which Denzel Washington's retired special…

Movies

Guess Ben Kingsley's worst filmmaking experience

Here's a fun game: Sir Ben Kingsley has made a lot of films since "Gandhi" in 1982, but at least one of them was a…

Books

Does Lena Dunham have any secrets left?

Get a sneak peek at her new book to determine if it’s worth the read.

NFL

3 things that went wrong in Jets loss…

The Jets have very little room for error with a far-from-explosive offense.

NFL

Eli Manning finally feeling good in West Coast…

The Giants have very little time before their next game, but they still took a moment to relish the team’s biggest offensive outburst since Week 1 of 2013.

College

College football top 25 poll: Oregon, Alabama close…

College football top 25 poll: Oregon, Alabama close in on FSU

NFL

Jay Cutler takes Marc Trestman's coaching to heart

While Jay Cutler turned to an autobiography on the man who would be his head coach, Trestman had personal experience with the player.

Wellbeing

Exercising leads to more drinking — and we…

  We’re rewarding ourselves with more than dessert on days we exercise, according to a new study. On days when people exercise more, typically Thursday…

Wellbeing

5 gadgets to protect you from sharks, concussions,…

The medical industry is inundated with devices looking after all aspects of your wellbeing, from monitoring your sleep patterns to warding off shark attacks. We…

Wellbeing

Narcissism and the ugly side of vanity

I have a friend who constantly talks about herself and rarely asks any questions about my life. She is constantly preening, obsessed with her body,…

Wellbeing

Lacking new ideas, Apple Watch disappoints health experts

Technology pundits were quick to predict the demise of most fitness wristbands and smartwatches when the Apple Watch was announced. But health care professionals and…