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Facebook prepares largest ever Internet stock flotation

By Benjamin Chiou

Date: Thursday 02 Feb 2012

Facebook prepares largest ever Internet stock flotation

In one of the most talked about initial public offerings (IPOs) in stock market history, Facebook Inc. has finally filed its S-1 document to the Securities and Exchange Commission.

The social networking giant intends to raise $5bn when it debuts on Wall Street later this year, which could represent the largest ever IPO by an internet company. Google’s IPO raised $1.9bn back in 2004, valuing the search engine titan at $23bn.

Facebook is valued at between $75bn and $100bn.

In a letter issued along with the S-1 statement, Zuckerberg said: “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.

“We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services (…) We believe that we have an opportunity to have an important impact on the world and build a lasting company in the process. I look forward to building something great together,” he said.

The 197-page prospectus finally revealed the eagerly-awaited financial statement from the company, showing that revenues surged from $777m in 2009 to $3,711m last year. Pre-tax profits jumped from $254 to $1,695 over the period.

According to the statement, the firm valued its Class B common stock at $29.73 per share as of December 31st 2011. USA Today speculates that Facebook may try to sell its shares at a premium price of between $35-40 a share.

Paddy Power, the European betting company, has already started taking bets on what it expects the share price to be when Facebook debuts.

It seems unlikely, at 10/1, that Facebook will price less than $25 per share, while the most likely outcome is considered to be between $35-44.99 at 10/11.

“With Facebook now a part of most of our day to day lives the IPO was always going to get people talking, the odds would suggest that the price will fall between $35 and $44.99 but given Facebook’s history of exceeding expectations I don’t think we can rule anything out,” said a Paddy Power spokesperson.

BC

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