Facebook increases its IPO price range
Facebook IPO plan stands to rake in more than $100 billion and mint several new billionaires
Want in on the Facebook IPO? Wait awhile and see if you still ‘like’ the stock after it settles down
What you need to know about Facebook’s initial public offering:
Q. Can the guy on the street get in on the IPO, before it starts trading?
A. Not likely.
Shares are going to the biggest and best clients of the investment firms underwriting the IPO.
That said, it’s still worth a try, especially because Facebook is expected to pop in price after it starts trading.
Q. What do you have to do to get a crack at the IPO?
Several discount brokers, such as E*Trade and Charles Schwab, are making shares available to their customers.
You must have a brokerage account — preferably one with lots of money in it. At Fidelity, for instance, clients must have at least $500,000 or meet other requirements to be eligible to buy the hot stock.
Q. So when can the average investor get in on the action?
A. Once trading starts, which is expected to be mid-morning on Friday.
Q.
Should youbuy once it starts trading?
A. It’s probably best to stay away on Day One when there is likely to be frenetic buying and selling.
“It could open so high that it will back off right away,” said Scott Sweet, senior managing partner of IPO Boutique “I would suggest aftermarket buyers wait until it stabilizes, meaning trading volume starts to decrease.”
Q. How strong is the demand?
A. Red hot. With frenzy building, the company just upped the price range of its shares to $34 to $38 from $28 to $35.
“There is a stampede of interest,” Sweet said.
Q.
What’s the long-term outlook for Facebook? Is this a stock you want in your portfolio?
A. Maybe not. The IPO already gives Facebook a valuation of $100 billion. That’s as large as Amazon and on the way to Google’s valuation — and those are two of the most successful Internet companies in the world, noted Fred Moran, chief investment officer at Worthian Capital.
“At a $100 billion valuation, Facebook has already built in a tremendous amount of anticipation and investor excitement,” Moran said.
“It may see some strong follow-through, but it’s unclear whether it is sustainable.”
pfurman@nydailynews.com
http://www.nydailynews.com/news/money/facebook-ipo-wait-awhile-stock-settles-article-1.1079005#ixzz1v0L9R151
Facebook increases its IPO price range
The world's largest online social network on Tuesday increased the planned price range for its stock to $34 to $38 per share in a filing with the Securities and Exchange Commission. That's up from its previous range of $28 to $35. At the upper limit of $38, the sale would raise about $12.8 billion.
The move, which values Facebook as high as $104 billion, comes amid growing investor excitement about the offering. Analysts are comparing the frenzy surrounding Facebook's IPO to Google's in 2004, though in sheer size the latter pales in comparison.
At the same time, half of Americans think the expected value for Facebook is too high, according to a new Associated Press-CNBC poll conducted before the company raised its expected stock price on Tuesday. Only a third of those surveyed said they think Facebook's expected value is appropriate.
Wall Street doesn't share that sentiment.
"Demand is obscenely high," said Scott Sweet the owner of advisory firm IPOBoutique about the offering. That said, he notes Facebook still has to be careful not to increase the price too much, so the stock still does well when it begins trading on the Nasdaq Stock Market, as expected, on Friday.
"This is a deal that literally must work, in that it is so high-profile," he said. "It would really level the IPO market if Facebook flopped."
As it stands, Facebook would be the fourth-largest U.S. IPO in history, edging out AT&T Wireless, whose 2000 IPO raised $10.6 billion according to Renaissance Capital, an IPO investment-advisory firm.
Price worries won't necessarily stop would-be investors. Facebook raised the price range in response to strong demand for its stock, and it's possible that the stock could price even higher Thursday.
But on Tuesday came a potential stumbling block as the company confirmed that General Motors, reportedly the third-largest advertiser in the United States, is halting its paid Facebook advertising.
"We regularly review our overall media spending and make adjustments as needed. This happens as a regular course of business and it's not unusual for us to move our spending around various media outlets — especially with the growth of multiple social and digital media outlets," a GM spokesman said Tuesday in an email statement.
A report from The Wall Street Journal said that GM was pulling out of the paid Facebook ad market because the company found its ads on the social network to be ineffective. The Journal, which reported that GM spent $10 million a year on paid Facebook advertising, cited unnamed sources for its information.
Analysts say GM is not the only company doubting Facebook's ability to woo consumers with paid ads.
"Companies in industries from consumer electronics to financial services tell us they're no longer sure Facebook is the best place to dedicate their social-marketing budget — a shocking fact given the site's dominance among users," Forrester analyst Nate Elliott wrote in a Monday blog post, according to the Journal.
Advertising is Facebook's main revenue stream, and it has already admitted that it is not yet able to convert its mobile app's growing popularity into more advertising dollars.
Separately, an acquisition announced Tuesday could help Facebook in its mobile attempts — the company agreed to acquire the team behind a London-based mobile firm called Lightbox.
The deal is solely for the employees of the small company, which produced apps and products similar to Instagram, which Facebook has agreed to acquire for $1 billion, but Lightbox has more of a focus on Android devices while offering nonmobile options.
Lightbox will stop accepting new members and close its doors in about a month.
The deal is similar to Facebook's acquisition last week of Glancee, a San Francisco-based location-sharing mobile app.
No terms were disclosed in either deal, but both are believed to be solely for the companies' workers, which will help Facebook boost its mobile teams with experienced employees.
Facebook is expected to execute its IPO Thursday night, with shares hitting the Nasdaq stock exchange Friday morning under the ticker symbol FB.
http://seattletimes.nwsource.com/html/businesstechnology/2018214898_facebookipo16.html
Facebook IPO plan stands to rake in more than $100 billion and mint several new billionaires
A FRENZY for Facebook built Tuesday as the company hiked its expected opening price for shares to about $38 — making the eight-year-old social media site worth $104 billion.
The staggering sum set ahead of Friday’s hotly anticipated IPO would instantly make Facebook more valuable than American corporate icons like McDonald’s, Disney and Kraft.
“There are more than 2 billion global Internet users,” Facebook said grandly in its SEC filing, “and we aim to connect all of them.”
By August, the social network is expected to sign up a billion people — one of every seven humans on the planet.
That staggering reach, and investors’ everyday familiarity with the product, was fueling an unprecedented appetite for shares.
“Some investors are just captivated with the idea of owning Facebook,” said Dan Veru, chief investment officer at Palisade Capital Management.
Analysts said the initial offering of 337.4 million shares was already vastly oversubscribed and advance orders were being cut off.
But late Tuesday reports emerged that Facebook would increase its offering by 85 million shares, bringing the total to more than 420 million shares.
With an increase in size, the IPO could raise more than $18 billion for Facebook, more than 10 times the $1.67 billion Google raked in when it went public in 2004.
Existing stockholders — Facebook employees and venture capitalists who invested early — stand to make as much as $6 billion.
Wealth managers say there could easily be 500 to 1,000 new millionaires in America by the close of business Friday.
That’s on paper, though: Facebook employees will have a 90- to 180-day “lockup” period in which they can’t sell their shares, to prevent the market from being flooded.
By the time they can sell, the stock may no longer be flying high.
General Motors threw a last-minute splash of cold water on expectations Tuesday.
The auto giant’s executives reportedly decided to yank their relatively small $10 million ad campaign from the site for a very big reason: They said Facebook ads don’t work.
Selling ads is the prime source of income for Facebook, but a majority — 57% — of Facebook users in a new AP-CNBC poll said they never click on any of the site’s ads.
The same poll found that half of Americans think Facebook is a passing fad that won’t be around in a few years.
But that ambivalence appeared at odds with the growing hoopla around Friday’s start of public trading in the company’s shares.
Analysts expect huge volatility when shares begin trading under the ticker symbol FB on Friday.
Regular Joe investors will have a hard time buying FB at the opening price.
Most of the shares on offer are already earmarked for investment banks, company insiders, institutional investors and preferred clients.
Once the stocks begin trading Friday, anyone can buy — but by then, it may no longer be a good buy.
Excitement and hype can send a new stock soaring into the stratosphere. Then the well-connected investors pull out, and the price crashes back to earth, leaving ordinary investors holding the bag.
The last frenzied tech IPO was Groupon, which went public six months ago at an opening price of $20. The stock soared as high as $31 on the first day, but plunged to $15 in days.
It closed Tuesday at $12.
Mark Zuckerberg, the Dobbs Ferry, Westchester, dentist’s son who started the website in his Harvard dorm room just eight years ago, will ring the Nasdaq’s opening bell Friday.
By Friday night, the 28-year-old will be worth about $24 billion.
That would make him approximately the 15th richest man in the world, on par with Mayor Bloomberg, but trailing the likes of Bill Gates ($69 billion) and Warren Buffet ($44 billion.)
Donald Trump had some practical advice for him Tuesday.
“I hope Mark Zuckerberg signs a prenup with his current girlfriend — perhaps soon-to-be wife. Otherwise, she can walk away with 9 billion,” Trump tweeted.
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