Facebook plans to go public to raise USD 87 bn

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Arun Kumar | 04 May, 2012
Facebook will go public with a stock price of USD 28 to USD 35 to set the popular social network's valuation as high as USD 86.6 billion, according to documents filed with the Securities and Exchange Commission.

At the midpoint of the initial range, USD 31.50, the initial sale of more than 337 million shares of Facebook stock would net more than USD 10.6 billion, with about USD 5.6 billion of that going to the company.

The rest will go to existing stockholders who are selling their shares, including CEO and cofounder Mark Zuckerberg and venture capital investors such as Palo Alto-based Accel Partners.

The company's valuation at the midpoint of the suggested range would be about USD 78 billion, short of many projections that Facebook would shoot for a valuation of up to USD 100 billion.

Initially established in a Harvard dormitory by Zuckerberg and some friends as college-specific social networks closed off to interested outsiders, Facebook eventually opened up to the world and became the most popular social network in history, with more than 900 million monthly active users.

However, Facebook's profits dipped in the first three months of 2012 when compared with the same quarter in 2011.

While sales hit USD 1.06 billion in the first quarter, up 45 percent from the year-ago quarter, thanks to a 37 percent increase in advertising revenue, Facebook's total profit dropped to USD 205 million, from USD 233 million a year ago.

Facebook's most anticipated stock debut for Silicon Valley in several years is expected to set records for funds raised and valuation for an Internet company.

Google's IPO in 2004, which set the company's value at USD 23 billion and reaped USD 1.9 billion for the Mountain View search giant, is the largest for now.