Facebook will prices its shares at $38
when it begins trading on the Nasdaq on Friday. (Joel Saget / AFP / Getty Images)
|
Facebook Inc. priced its shares in its initial public stock offering at $38
late Thursday, setting the stage for its historic market debut Friday.
The IPO values Facebook at $104 billion, the largest-ever for a newly public company. The $18.4 billion that Facebook is expected to raise in the IPO itself would be the second-largest in U.S. history, trailing only the $19.65 billion of Visa Inc. in 2008.
The Facebook pricing comes at a jittery moment for the stock market, which suffered a deep drop Thursday in a continuation of the weakness that has gripped share prices this month.
The Dow Jones industrial average sank 156.06 points, or 1.2%, to 12,442.49. It has fallen 6.3% from its recent peak on May 1. The technology-laden Nasdaq composite, on which Facebook will begin trading Friday, slumped 60.35 points, or 2.1%, to 2,813.69.
Facebook's debut has dominated Silicon Valley and Wall Street in recent weeks, as the company and the financial markets geared up for the most anticipated IPO since Google Inc. in 2004.
The offering would raise $16 billion initially, and ultimately up to $18.4 billion as the Wall Street investment banks handling the deal distribute additional "over-allotment" shares, as is common in sought-after IPOs.
But even as the excitement has built, so has fear that individual investors rushing into the stock could be setting themselves up for a fall.
The IPO values Facebook at $104 billion, the largest-ever for a newly public company. The $18.4 billion that Facebook is expected to raise in the IPO itself would be the second-largest in U.S. history, trailing only the $19.65 billion of Visa Inc. in 2008.
The Facebook pricing comes at a jittery moment for the stock market, which suffered a deep drop Thursday in a continuation of the weakness that has gripped share prices this month.
The Dow Jones industrial average sank 156.06 points, or 1.2%, to 12,442.49. It has fallen 6.3% from its recent peak on May 1. The technology-laden Nasdaq composite, on which Facebook will begin trading Friday, slumped 60.35 points, or 2.1%, to 2,813.69.
Facebook's debut has dominated Silicon Valley and Wall Street in recent weeks, as the company and the financial markets geared up for the most anticipated IPO since Google Inc. in 2004.
The frenzy has been all the more intense given
that Facebook was launched only eight years ago in Mark
Zuckerberg's college dorm room. The company earned $1 billion last year, up
65% from the prior year. Revenue climbed 88% to $3.7 billion and is projected to
rise 65% to $6.1 billion this year, according to research firm EMarketer
Inc.
"There's never been a company that's gone from inception to IPO with this
kind of valuation," said Francis Gaskins, editor of IPOdesktop.com in Marina del
Rey. "It’s a rocket ship that's taken off."The offering would raise $16 billion initially, and ultimately up to $18.4 billion as the Wall Street investment banks handling the deal distribute additional "over-allotment" shares, as is common in sought-after IPOs.
But even as the excitement has built, so has fear that individual investors rushing into the stock could be setting themselves up for a fall.
Facebook announced Wednesday that Goldman
Sachs Group Inc. and other prominent insiders have significantly raised the
number of shares they're unloading in the IPO, a sign that the professional
investors in the best position to handicap Facebook's investment merits are
taking the opportunity to lighten their holdings. Their selling pushed up the
size of the IPO 25%.
No comments:
Post a Comment