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Facebook sets $28 to $35 IPO range, and you can likely ignore the $28

May 03, 2012|By Jessica Guynn
  • A Facebook page as displayed on a laptop computer.
A Facebook page as displayed on a laptop computer. (Justin Sullivan / Getty…)

It’s official: Facebook is seeking to raise as much as $11.8 billion in its initial public stock offering, the most ever for a Web company, according to a regulatory filing.

The Menlo Park, Calif., company plans to sell about 337.4 million shares at $28 to $35 apiece, according to the filing Thursday. That range, which is preliminary, could value the company as high as $95 billion. The company was said to be looking initially for a valuation as much as $100 billion.

Facebook is likely now just two weeks from trading its stock for the first time in this hotly anticipated IPO. Its roadshow to pitch itself to institutional investors begins Monday.

Few expect Facebook to price at the low end of its range; there's been a rush of interest in the IPO despite underwhelming first-quarter financial results.

“I think Facebook set a wide range to drive interest from traditional institutional investors, who were underwhelmed with Facebook's recently released first-quarter results,” said Lou Kerner, founder of the Social Internet Fund. “But the underwriters are going to see overwhelming global interest, and it's likely the ultimate IPO price is going to be higher than the indicated range.”

Michael Yoshikami, chief executive of Destination Wealth Management, said Facebook priced its IPO "to near perfection."

"Revenue growth suggests that current valuation put the company at a 20% premium over intrinsic value," he noted.

"This is a growth stock for sure," he added. "Investors must be prepared to live with sentiment swings."

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