As had been expected, Facebook will debut on the NASDAQ tomorrow morning at a price of $US38 per share. What’s that mean for you? Not much. What’s that mean for Mark Zuckerberg?
$US16 billion.
That $US38 per share comes at the upper end of the range the SEC would have allowed Facebook to open with, and it values the company at around $US104 billion. This might seem pretty aggressive considering the company pulled in revenues (not profits!) of $US3.7 billion last year. And it is! It is a very aggressive valuation of a company that hasn’t yet proven that it can actually convert its 900 million users into great big piles of money.
It’s hard to blame Facebook and its bankers for being optimistic, though; this is one of the most high-profile tech IPOs since forever, and fond memories of the 2004 Google cash volcano have been haunting investors ever since Facebook announced its public intentions. And oh my how current shareholders will profit! Zuck alone will be selling off about $US1.2 billion worth of shares, after which his stake in the company will be worth a mere $US19 billion. Goldman Sachs, another early Facebook investor, will also see a billion dollars worth of Facebook profit.
But what about you, dear reader? What do you stand to gain from Facebook’s debutant ball? Not much, unfortunately. In large IPOs like this, the majority of shares are already spoken for; they’ll only become widely available once the heavy hitters have decided to cash in on the initial surge, and you’ll be stuck catching them on the way down. [CNBC, WSJ]