Facebook valued at $104bn after IPO

Facebook raised $16bn (€12.6bn) in the biggest initial public offering by a technology company in history, pricing the shares at the top end of an increased range.

The social network, led by 28-year-old Mark Zuckerberg, sold 421.2m shares at $38 each.

The offering eclipses the 2004 IPO of Google, one of Facebook’s chief competitors for online advertising. Google raised $1.9bn in its initial share sale, including an over-allotment option. The shares sold at $85 apiece, giving Google (GOOG) a market value of about $23bn, or about 10 times sales in the 12 months through June 30, 2004.

Google is now worth over $200bn, making it the most valuable Internet company. At the top end of Facebook’s planned IPO range, the social network’s market value amounted to over $104bn.

This week, Facebook expanded the IPO to meet demand, allowing backers Goldman Sachs Group Inc. and Accel Partners to reap more gains.

The offering marks the culmination of Facebook’s evolution in less than a decade from a Harvard University dorm-room project into a social network with more than 900m users.

However, Mr Zuckerberg & faces stemming slowing sales growth after profit fell 12% last quarter.

“It’ll be a slam dunk when the shares surge on the first day of trading,” said Walter Todd, chief investment officer of Greenwood Capital in Greenwood, Carolina. “But I’m not sure that’ll still be true a little further out.”

Mr Todd said he would wait until Facebook has reported quarterly earnings at least once before he considered buying the shares. The stock is set to start trading today on the Nasdaq.

Facebook hired more than 30 underwriters for the sale, led by Morgan Stanley, JPMorgan Chase & Co, and Goldman Sachs. Underwriters will have the option to buy an additional 63.2m shares from the company and its holders after the IPO.

The social network topped $4bn in revenue in the 12 months through Mar 31, with more than 900m users. Sales are poised to rise 64% to $6.1bn in 2012, according to researcher EMarketer Inc, which would be the third straight year of slowing growth.

Last month, Facebook said first-quarter profit fell to $205m as sales growth slowed and marketing costs more than doubled.

Growth in ad sales is not keeping pace with gains in users, many of them logging on from handheld devices, Facebook said this month. Facebook has said it would add mobile advertising along with new ads to reach users when they log off the website.

Bloomberg


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