Empire State Realty Trust, the owner of the mythical background skyscrapers of Manhattan , has already set the price of its IPO to be located in the $ 13 per share
The electronic screen on the front of the Nasdaq stock market announces the listing of Facebook shares that begin trading Friday By Roland Jones
Shares of Facebook are set to start trading on the public markets later Friday in one of the largest and most watched initial public offerings of stock of recent years.
Facebook founder and CEO Mark Zuckerberg rang the opening bell at the Nasdaq stock market Friday morning. Shares of Facebook are expected to begin trading publicly at 11 a.m. ET under the symbol “FB.”
Facebook went public after the close of trading Thursday at $38 a share, raising $16 billion in a landmark initial public offering that values the company at more than $100 billion.
Investment banks organizing the stock offering set the price at the top end of the range of $34 to $38 per share estimated by Facebook in a regulatory filing earlier this week.
At $38 a share, the offering values the eight-year-old company at $104 billion, making its IPO the largest-ever stock market debut for an Internet company. It will raise more than $16 billion for Facebook and selling shareholders, including Zuckerberg, and ultimately could raise up to $18.4 billion, assuming underwriters exercise their option for “overallotments” to meet strong demand.
Facebook has enjoyed remarkably swift growth. In just eight years the company has gone from a college service founded in a Harvard dorm to the third-largest public offering of stock in U.S. history, after stock offerings from General Motors and Visa.
The sky-high valuation of Facebook puts it a bit ahead of Web veteran Amazon.com, which has more than 10 times Facebook's $3.7 billion in revenue. But Facebook is growing quickly and posted $1 billion in profits last year, more than Amazon's $631 million.
Individual investors will get their first chance to buy shares of Facebook when they begin trading on the Nasdaq stock market Friday.
Analysts note that intense interest in Facebook’s offering is likely to drive the price up sharply as soon as trading begins, meaning the first public trade could be well above the offering price.
“This is not a strategy for the faint of heart,” said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, N.Y.
In an example of the type of pressure investors could face, LinkedIn, another social media company, went public almost exactly a year ago at $45 a share and closed at $94 on a volatile first day of trading that saw its shares top $122 at one point.
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That means investors lucky enough to get in at the offering price were able to book an immediate paper profit of more than 100 percent or "flip" shares and cash in. Other investors paid as much as $122 a share for LinkedIn that day and were left with paper losses. (LinkedIn shares currently trade for about $105.)
Facebook could easily see a similar first-day trajectory, but it is impossible to know. Online investors who place a general order for Facebook stock will get shares at whatever price happens to be prevailing at the moment.
“Is it a sound investment for a sensible portfolio? No,” said Johnson. “Is it a worthwhile speculative investment? Sure, but you have to be fully prepared for something that could be a very emotional event. And I have the sense that [the IPO price] could be very overvalued.”
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