Facebook poised for $100bn stock market flotation

It’s one of the most eagerly awaited stock flotations in recent years and will value Facebook at about $100 billion (€77bn).

The world’s largest social-networking service hopes to raise $10bn from the initial public offering (IPO) in the coming week, giving co-founder Mark Zuckerberg a personal fortune of $25bn.

The IPO would provide funds to help Facebook maintain its expansion and fend off competition from rivals such as Google and Twitter.

Facebook may set its price at the low end of the valuation range to entice investors and ensure the stock rises after the IPO, said Anupam Palit, an analyst at GreenCrest Capital Management LLC, New York.

Facebook is close to hiring Morgan Stanley to handle the deal, and Goldman Sachs Group will probably play a “major role” in the IPO, the Wall Street Journal said. The newspaper was first to report that Facebook may file its paperwork as early as the coming week.

Facebook was founded by Mark Zuckerberg and his college roommates in 2004 and is debuting on stock markets in its eighth year.

Google’s IPO came six years after being founded by Larry Page and Sergey Brin. When Google turned eight in August 2006, its market cap was roughly $116bn.

Today, the company is worth nearly $190bn — down from a peak of about $235bn in November 2007.

Both Facebook and Google earn most of their money from advertising and are now competing to gain as much information as possible about their users to help advertisers target niche audiences.

Investors may be asked to bet heavily on the belief that Facebook will continue to revolutionise the way people communicate. Even with Facebook’s heady growth rate, Google had ad revenue last year of more than five times what Facebook is expected to get in 2013. Yet it is Google that is mimicking Facebook in building a rival social network called Plus.

Zuckerberg, 27, is already worth about $17.5bn. Most of that wealth is drawn from the value of Facebook shares that have traded among a small universe of well-heeled investors that buy stakes before companies go public.

Others to pocket billions from the floatation include:

* Dustin Moskovitz — who helped set-up the site at Harvard. He owns about 5% of the company.

* Eduardo Saverin — he sued Zuckerberg after he was shafted from the company. He too owns 5% — worth $5bn.

* Sean Parker, co-founder of the music sharing site Napster. His stake is worth $4bn.

* Peter Theil, who helped create PayPal. His stake is now worth $3bn.

* Investment firm Elevation Partners, in which Bono is a shareholder, owns 1.5%, worth an estimated $1.5bn.