Facebook IPO: $38 Shares Biggest Tech Offer

May 17, 2012 4:45pm
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(Image credit: Mark Lennihan/AP Photo)

Facebook announced today that its initial public offering of common stock will be priced at $38 a share, valuing the company at $104 billion, the largest IPO for a U.S. tech company, raising $16 billion.

As media and investor interest in Facebook’s IPO has grown over the past weeks, the company priced its IPO at the highest end of its earlier estimates. On Tuesday, Facebook raised its IPO price range to $34 to $38 a share, from $28 to $35.

To satiate the growing investor appetite for shares of the social media company, on Wednesday Facebook increased the number of shares to be sold at the market debut by 25 percent. Trading is expected to open at 11 a.m. Friday on the Nasdaq.

The company is offering 421.2 million shares of common A stock, which includes 180 million new shares that will be sold by the company and 241.2 million shares sold by existing shareholders  such as early investors and Facebook’s founders.

Facebook’s investment bank lead underwriter, Morgan Stanley, ultimately determines who gets shares of the company before shares are sold to the larger public on Friday, said Jim Krapfel, IPO analyst with investment firm Morningstar. All of the 421 million shares will be sold tonight at the offering price to those investors who met the minimum buy-in requirements, which was millions of dollars for institutional investors.

“The higher your account size and the more business you do with the company, or if your track record indicates you purchased technology IPOs in the past,  you’re more likely to receive shares and are likely to get a higher allocation, but there’s no guarantee,” Krapfel said.

Investor consensus predicts the stock will trade higher tomorrow and close up, but to what extent is unknown, said Krapfel. Morningstar has valued the company at $32 a share.

“It wouldn’t be surprising to see the stock trade up into the 50s intraday and into the close,” he said.

 

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