|It is being reported that Facebook is going to file an amendment to its S-1 this afternoon that will include its initial thoughts on pricing: |
Facebook IPO to Seek $85 Billion to $95 Billion Value
By SHAYNDI RAICE, ANUPREETA DAS and JOHN LETZING
Wall Street Journal
Updated May 3, 2012, 2:42 p.m. ET
Facebook Inc. is planning to set the price range for its impending initial public offering in the high-$20s to mid-$30s a share, valuing itself at roughly $85 billion to $95 billion, said people familiar with the matter.
The pricing puts the social network on track to become the most valuable U.S. Web company at the time of an IPO, exceeding Google Inc.'s GOOG +0.60%$23 billion valuation in 2004. It would also put Facebook just behind the market capitalization of Amazon.com Inc. AMZN -0.69%and ahead of other technology giants like Hewlett-Packard Co. HPQ -2.93%
Facebook plans to unveil its pricing range in a new regulatory filing after the market close, said people familiar with the matter. People familiar with the matter had said Facebook expected to go public at a valuation of up to $100 billion.
The company is planning to start its roadshow to pitch its stock to investors on Monday, said people familiar with the matter. If the roadshow goes smoothly, Facebook will hold its IPO on May 18 on the Nasddaq Stock Market, setting final pricing for the deal the day before, said these people.
Companies regularly tweak their pricing information after they've issued a first pricing range. That means Facebook's share price could climb higher in the coming days, depending on demand seen by the firm's investment bankers as they showcase the deal to institutional investors on a roadshow.The offering is being led by Morgan Stanley, MS -4.28% J.P. Morgan JPM -0.81%and Goldman Sachs GS -2.16%.
Facebook's IPO is a watershed moment for Silicon Valley, which is riding a wave of a new generation of Internet IPOs. But even amid the boom, which has spawned the likes of daily-deals site Groupon Inc. GRPN -2.46%and social-gaming company Zynga Inc., ZNGA -3.07%Facebook stands out. The social network has garnered an audience of more than 900 million users since it was founded in 2004, and has been the subject of an Oscar-winning film "The Social Network."
Much like the IPO of Internet browser company Netscape in the mid 1990s, which went on to produce a coterie of other Web businesses, Facebook has also generated new start-ups built on top of its platform. Those range from Zynga to up-and-coming sites like online bulletin board Pinterest.
Facebook's reach is also unprecedented. The company, founded by Mark Zuckerberg and some Harvard University friends, is now fast approaching an audience of one billion, and it continues to draw users from numerous demographics and international markets. It's now expected to broach the sensitive—but massive—Chinese Internet market.
Still, some recent financial disclosures by the company put a damper on enthusiasm about its impending IPO. Unlike many other Web companies that recently went public, Facebook is profitable. But the company recently disclosed that its profit and sales dipped in the first quarter of this year, compared to the prior period.
Sales in the period fell 6% from the fourth quarter to $1.06 billion, while profit slumped 32% to $205 million.
In 2011, Facebook posted a profit of $1 billion and $3.7 billion in sales, compared to a loss of $56,000 and $272 million in sales as recently as 2008.
Facebook has also been on something of a spending spree of late, shelling out $1 billion in a cash and stock deal for photo-sharing service Instagram and agreeing to pay $550 million for a trove of patents sold by Microsoft Corp. MSFT -0.38%
Scott Sweet, senior managing partner at IPO Boutique, said the pull of Facebook's IPO became clear when his elderly parents started asking him about it on behalf of neighbors at their Florida retirement community.
"Their friends in the community they live in weren't familiar with IPOs, and don't have a Facebook account, but are very much interested in purchasing Facebook," he said. "I've used the word pandemonium for this offering since it was filed."
With such demand in the offing, few investors think Facebook's IPO arc will follow that of Google's in 2004. University of Florida Professor Jay Ritter noted that Google initially priced its stock at its IPO at between $108 and $135 a share. That was later revised down to $85 to $95 and ultimately priced at $85. Google shares now trade for more than $600.
Write toJohn Letzing at email@example.com