We already knew the Facebook IPO was going to be big. Now we know how big – or at least how big Mark Zuckerberg and company want it to be.
The social network giant announced today that it is targeting a $96 billion deal in its much-anticipated initial public offering on May 18. If it succeeds, that would be the richest debut ever for a U.S. stock.
Facebook’s goal is ambitious, to say the least. For starters, a $96 billion valuation would be 96 times the $1 billion in earnings the company reported in 2011. It would also more than quadruple the $23 billion valuation Google (Nasdaq: GOOG) achieved in its 2004 IPO – the gold standard of tech IPOs.
In fact, a $96 billion valuation out of the gates would be 60% higher than the current record of $60.2 billion, established by UPS (NYSE: UPS) in 1999. And Facebook is only eight years old. The United Parcel Service had been in existence for 92 years when it went public.
To get to a $96 billion market cap, the Facebook IPO is expected to sell 337 million shares at a price between $28 and $35 a share. If the stock prices at the low end of that range, Facebook’s initial valuation would “only” be $77 billion – still a record and still 77 times earnings.
If Facebook raises the $13.6 billion analysts are expecting from its IPO, that would trail only Visa (NYSE: V) and General Motors (NYSE: GM) for the most money raised in a U.S. IPO.
Editor's note: I'm finishing up research on Facebook's IPO as well as two others coming up this year. The report details how to maximize returns from IPOs and the pitfalls to avoid. I expect to release it in the next couple of weeks before the Facebook IPO. So keep reading my column and I'll let you know when it's available.
So it’s safe to say the Facebook IPO is in a league of its own.
05-08-2012 9:42 AM