Facebook $16billion IPO jumps 13 per cent minutes after trading opened


Prospects that Facebook’s IPO would exceed its projections of raising over $16 billion loomed large early Friday. The share, which priced at $38 per share, jumped 13 per cent to about $43 minutes after the company went public in the largest Internet IPO in history. 

Thomson Reuters has ranked the IPO third largest ever in US’ trading history, after the $19.7billion raised by Visa in March 2008 and $18.1 billion by General Motors in November 2010.

The $38 IPO price is the rate at which Facebook’s underwriters, including lead banker, Morgan Stanley, are selling the shares to clients, consisting large institutional investors, mutual funds and hedge funds firms.

Earlier on Friday, Facebook founder, Mark Zuckerberg, who launched Facebook from a Harvard form room in 2004, rang the NASDAQ bell in front of hundreds of employees at the company’s headquarters in California.

Today, Facebook has over 900 million users.

The success of the IPO is set to launch Mr. Zuckerberg, 24, as one of the world’s richest men, worth about $20billion. Facebook investors are betting on steep revenue and earnings growth over the next few years.

With $1billion in profit last year, the company has an extremely high price-to-earnings ratio of 100-to-1, higher than Google’s when the search titan went public in 2004. Facebook users have given the company a treasure-trove of personal data ripe for targeted advertising.

Analysts say Mr. Zuckerberg’s challenge now is how to use all that data to generate the kind of profit that will justify Facebook’s sky-high valuation.

Despite the enthusiasm over Facebook’s public debut, some corporate governance experts are raising concerns about the company’s controversial dual-lass ownership structure, which cedes 55 per cent of the company’s voting control to Mr. Zuckerberg, meaning he would resist attempts by activist shareholders to take-over the company.



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