The shareholder base has grown to more than 1,000, compared with the 50 to 100 investors most companies have when they go public, according to an estimate by Sam Hamadeh, head of research firm PrivCo. Private purchases pushed Facebook’s valuation past $100 billion (€75bn), possibly limiting immediate gains for IPO investors, given that Facebook may seek a $75bn (€55bn) to $100bn value.
“Facebook is a blue-chip stock and it’s not even public yet,” said Kevin Landis, portfolio manager for the Firsthand Technology Value Fund in San Jose, California. Facebook jumped as high as $44 this month in private trading, valuing the company at $103bn, leaving it higher than when Landis bought stock at $30 to $31 in October. He said he aims to add to his holdings.
While demand for the biggest Internet IPO on record may push the stock even higher when Facebook goes public, private trades through channels such as SecondMarket Inc and SharesPost Inc are already making it possible for employees and venture capitalists to cash out.
Facebook, which filed for an initial share sale this month, has yet to set its price range for the IPO.
Reports earlier this year said Zuckerberg was weighing a valuation of as much as $100bn.
The private trading may make Facebook’s debut more like a secondary offering, where holders sell stock in an already public company, said Barry Ritholtz, head of FusionIQ, an equities research firm.
“The people buying now at the IPO price are presuming there’s lots of upside — I’m skeptical,” said Ritholtz.
Insiders and investors with $1m of net worth and a salary of more than $200,000 can qualify to buy stock on private marketplaces, according to SEC rules. In an auction this week on SharesPost, Facebook stock had a clearing price of $42, valuing the company at $98bn.