Facebook has floated on the US stock market with a market worth of $104bn, in the highest ever first-day valuation of a US public company, ahead of the likes of Amazon, Disney and Kraft. The valuation comes despite concerns about the company’s long-term money making potential.
The valuation is more than any other US company has been worth on the day of its market debut.
Globally, Facebook, would have the third highest market valuation for a company at the time of its IPO, behind Agricultural Bank of China ($133bn) and Industrial & Commercial Bank of China ($132bn).
Facebook priced its offering at $38 a share on Thursday, but the price could be higher when shares begin trading under the FB symbol on the Nasdaq.
The $38 a share price tag means Facebook would trade at over 100 times historical earnings versus Apple’s 14 times and Google’s 19 times.
Valued at $104bn, Facebook is larger than Starbucks and Hewlett-Packard combined, sparking intense speculation about how much higher its valuation will rise once shares start trading.
Some expect shares could rise 30 per cent or more on Friday, despite ongoing concerns about Facebook’s long-term money-making potential.
Facebook also tops the US listed Internet IPOs since 2011, with a valuation which is much ahead of Zynga and Groupon.
Facebook hired financial giants like Morgan Stanley, J P Morgan, Goldman Sachs, Bank of America Merrill Lynch, Citigroup and Deutsche Bank Securities to serve as book runners for the offering.
Facebook employees marked the event with an all-night “hackathon” at the company’s Menlo Park, California headquarters starting on Thursday evening, a tradition in which programmers work on side projects that sometimes turn into mainstream offerings.
Facebook’s 28-year-old founder and Chief Executive Mark Zuckerberg was expected to ring a bell at the company’s Silicon Valley headquarters on Friday morning to kick off trading on the Nasdaq.
Founded in a Harvard dorm room in 2004, Facebook has grown into the world’s dominant social network with 900 million users.
For all the high expectations surrounding Facebook, the company faces challenges maintaining its growth momentum.
Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones.
Revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.
