Facebook boosts IPO size by 25%, aims for $15 bln
Facebook Inc will increase the size of its initial public offering by 25% and could raise as much as $16 billion.
NEW YORK/SAN FRANCISCO:
Facebook Inc will increase the size of its initial public offering by 25%, a source familiar with the matter said, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about the company's long-term potential to make money.
Those concerns over revenue growth were underscored earlier on Tuesday, when General Motors said it planned to pull out of advertising on Facebook. Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, will add about 85 million shares to its IPO, floating about 422 million shares in an offering expected on Friday, the source told Reuters, declining to be identified because the information was confidential.
The expanded size, coupled with Facebook's recently announced plans to raise the IPO price range, would make Facebook the third-largest initial share sale in US history after Visa Inc and GM. Facebook declined to comment on the increased IPO size, which was first reported by CNBC on Tuesday.
The social networking company is drumming up massive demand for the offering even as slowing revenue and user growth spur questions about the long-term Facebook story.
"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, should not seriously hurt Facebook's IPO 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, noting, 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 Inc 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 Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.
Facebook Inc will increase the size of its initial public offering by 25%, a source familiar with the matter said, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about the company's long-term potential to make money.
Those concerns over revenue growth were underscored earlier on Tuesday, when General Motors said it planned to pull out of advertising on Facebook. Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, will add about 85 million shares to its IPO, floating about 422 million shares in an offering expected on Friday, the source told Reuters, declining to be identified because the information was confidential.
The expanded size, coupled with Facebook's recently announced plans to raise the IPO price range, would make Facebook the third-largest initial share sale in US history after Visa Inc and GM. Facebook declined to comment on the increased IPO size, which was first reported by CNBC on Tuesday.
The social networking company is drumming up massive demand for the offering even as slowing revenue and user growth spur questions about the long-term Facebook story.
"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, should not seriously hurt Facebook's IPO 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, noting, 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 Inc 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 Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.