Facebook boosts IPO size 25%, targets $16bn fund
FACEBOOK has increased the size of its initial public offering by almost 25 percent, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about its long-term potential to make money.
Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, said on Wednesday it will add about 84 million shares to its IPO, floating about 421 million shares in an offering expected to be priced on Thursday.
The additional shares will be sold by early investors including PayPal co-founder Peter Thiel, Accel Partners’ James Breyer and investment manager Tiger Global Management, the company said in a filing.
The company itself has not increased the number of shares it will sell.
Zuckerberg’s voting power will be reduced to about 55.8 percent from about 57.3 percent after the IPO as a result of the issue of additional shares, the company said.
The expanded size, coupled with Facebook’s recently announced plans to raise the IPO price range, would make Facebook the thirdlargest initial share sale in US history after Visa and General Motors.
The social networking company is drumming up massive demand for the offering even as slowing revenue and user growth spur questions about the longterm Facebook story.
Those concerns over revenue growth were underscored on Tuesday, when GM said it planned to pull out of advertising on Facebook.
“This is much more a spectacle, a media event and a cultural moment than it is an IPO,” said Max Wolff, an analyst at GreenCrest Capital. “This is not a game of models and fundamentals at this point.” GM’s announcement, while ill-timed for Facebook, should not seriously hurt the IPO’s reception for now as it may not be representative of advertisers’ overall attitude, said Brian Wieser, an analyst with Pivotal Research Group.
“The demand for the IPO probably won’t be affected materially by this,” he said, adding, however, there were probably a lot of calls between underwriters and investors following GM’s announcement.
The IPO, Silicon Valley’s largest, eclipses the roughly $2 billion debut by Google in 2004. Facebook raised the target price range to $34- $38 per share in response to strong demand, from $28- $35, according to a Tuesday filing.
That would value the company at $93-$104 billion, rivaling the market value of Internet powerhouses such as Amazon.com and exceeding that of Hewlett-Packard and Dell combined.