Are you planning to buy Facebook stock?
Facebook announced today that its initial public offering of common
stock will be priced at $38 a share, valuing the company at $104
billion, the largest IPO for a U.S. tech company, raising $16 billion.
As media and investor interest in Facebook’s IPO has grown over the
past weeks, the company priced its IPO at the highest end of its earlier
estimates. On Tuesday, Facebook raised its IPO price range to $34 to $38 a share, from $28 to $35.
To satiate the growing investor appetite for shares of the social
media company, on Wednesday Facebook increased the number of shares to
be sold at the market debut by 25 percent. Trading is expected to open
at 11 a.m. Friday on the Nasdaq.
The company is offering 421.2 million shares of common A stock, which
includes 180 million new shares that will be sold by the company and
241.2 million shares sold by existing shareholders such as early
investors and Facebook’s founders.
Facebook’s investment bank lead underwriter, Morgan Stanley,
ultimately determines who gets shares of the company before shares are
sold to the larger public on Friday, said Jim Krapfel, IPO analyst with
investment firm Morningstar. All of the 421 million shares will be sold
tonight at the offering price to those investors who met the minimum
buy-in requirements, which was millions of dollars for institutional
“The higher your account size and the more business you do with the
company, or if your track record indicates you purchased technology IPOs
in the past, you’re more likely to receive shares and are likely to
get a higher allocation, but there’s no guarantee,” Krapfel said.
Investor consensus predicts the stock will trade higher tomorrow and
close up, but to what extent is unknown, said Krapfel. Morningstar has
valued the company at $32 a share.
“It wouldn’t be surprising to see the stock trade up into the 50s intraday and into the close,” he said.
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