Facebook pulled it off. As investors raced to get shares, the sprawling social network raised $16 billion on Thursday, in an initial public offering that values Facebook at $104 billion.
The I.P.O. signals a rapid evolution for the company. In just eight years, Facebook has gone from a scrappy college service founded in a Harvard dormitory to the third-largest public offering in the history of the United States, behind General Motors and Visa.
Investors, who are paying $38 a share for the offering, now consider Facebook more stalwart than a start-up. At $104 billion, the social network’s market value is higher than McDonald’s, Citigroup, Amazon.com and all but a handful of other American companies.
“Facebook is here to stay,” said Navin Chaddha, a managing director of the Mayfield Fund, a venture capital firm. “It’s a virtual economy where people are spending more time than any other Internet property.”
Facebook will be celebrating the occasion with the same style on which it built its reputation.
At 7 p.m. on Thursday, the social network will kick off its 31st “hackathon,” with engineers coding into the wee hours of the night, employees amped up on Red Bull and staffers-turned-DJs playing their tunes, according to a person with knowledge of the event. Part work, part fun, the Facebook tradition, which will take place an area of the company’s campus known as Hackers Square, encourages employees to do what they do best – brainstorm, design and create.
On Friday, Mark Zuckerberg, the baby-faced founder known for his trademark hoodie sweatshirt, is set to ring the opening bell for the Nasdaq from Facebook’s headquarters in Menlo Park, Calif., surrounded by executives, engineers and other employees. Shares of Facebook, which will trade under the ticker FB, will start selling to the public later in the morning.
For now, Facebook seems to be a must-own stock.
As the largest player in the social media arena, Facebook has been enjoying blue-chip status from the start, with investors worried about missing out on what could be the next Google. The social network will also soon join Nasdaq 100, the technology index, so money managers looking to track the benchmark will join the swell of demand in the coming months.
The frenzy for Facebook was on full display during the two-week roadshow leading up to the I.P.O. Across the country, investors packed hotel ballrooms to hear Facebook executives give their pitch. Bankers drew up waiting lists for the events, which included stops in New York, Boston and Washington.
The tour yielded an avalanche of orders. As investors lined up for shares, Facebook raised its price range and increased the size of its offering. The company is offering 421.2 million shares, 25 percent more than originally intended. Given the strong demand, the bankers, led by Morgan Stanley, JPMorgan Chase and Goldman Sachs, are widely expected to sell 63.2 million shares.
With the super-sized offering, Facebook’s insiders are taking the opportunity to cash in some shares. The group, which includes some who came early owners and more recent investors, will now collect up to $3.8 billion from the I.P.O. Goldman Sachs, for instance, which took a stake early last year, is selling about a third of its stake. Peter Thiel, the contrarian venture capitalist who was one of Mr. Zuckerberg’s first backers seven years ago, has also more doubled the number of shares that he is offloading to 16.8 million shares.
- Courtesy of the New York Times