Here's what you need to know about the Facebook IPO

Here's what you need to know about the Facebook IPO

This Friday, Facebook is set to list on New York’s NASDAQ index, with founder and CEO Mark Zuckerberg doing a live cross from the company’s headquarters in California to ‘virtually’ ring the bell on the opening.  If all goes to plan, that opening will be at 9:30am New York time (11:30pm Sydney time), and those interested will be able to watch it via the live video feed: Securities CFD clients will be able to track and trade the stock using its code: FB (US).

The stock is estimated to open at between US$28 and US$35 per share, which will put its listed component (337.4 million shares) on a valuation of between US$9.44 and US$11.8 billion, and its combined value of listed and unlisted shares at between US$69.3 and US$86.6 billion, according to my calculations based on the prospectus.  Not a bad return on equity for a company that has received a total of US$2.34 billion in funding thus far.  Interestingly, 157.4 million of the 337 million shares being offered are being sold by current shareholders to lock in a return.

Opinions regarding this IPO are omnipresent, and even Steve Wozniak, the co-founder of Apple who Kristian and I met yesterday as pictured, threw his hat in the ring yesterday, saying Facebook is a buy.  Interestingly, he is Chief Scientist at Fusion-io Inc., which makes solid-state drives for its clients, the largest of which is Facebook.

Rivkin won’t be putting forward an opinion at this stage because we are experts at analysing corporate events, company fundamentals and technical price data, which don’t really apply to this IPO.  The fundamentals are unjustifiable on paper and the only price data we have is from pre-IPO private stock auctions, which don’t give an indication of how this slice of stock might trade once in the hands of the public.

You might find these Facebook IPO stats interesting:

  • 337.4 million shares will be listed, with 2.14 billion shares remaining outstanding, creating a company value of up to US$86.6 billion
  • Because of the relatively small public offering, CEO Mark Zuckerberg will retain 58.8% of voting rights, despite selling 30.2 million shares from his private holding to the public
  • Google has a current market cap of US$196.9 billion, and has earnings per share of $32.99 on a US$604 share price, giving it a P/E ratio of 18.3.  If Facebook (mid-price) IPOs with a total company value of US$78 billion, it will have earnings per share of around 40c based on a US$31.5 share price, giving it a P/E ratio of over 78 times, based on 2011 financials.
  • Around 1,000 of Facebook’s 3,500 employees will become IPO millionaires this Friday, with the median age of its workforce being 26 years of age.

If you’d like to find out more about keeping track of or trading the listed Facebook stock, please contact us on 02 8302 3650.

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