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Investors clamor for Facebook's IPO

Facebook’s new campus in Menlo Park, Calif., features a community work area. The company is expected to file soon to start selling shares to the public. It’s expected to raise $10 billion in the offering, giving it a market capitalization of $100 billion.

Los Angeles Times

Facebook’s new campus in Menlo Park, Calif., features a community work area. The company is expected to file soon to start selling shares to the public. It’s expected to raise $10 billion in the offering, giving it a market capitalization of $100 billion.

MENLO PARK, Calif. — Wall Street is about to get Facebook fever.

The social networking giant with nearly 1 billion users is expected to file papers any day now to sell stock to the public. The timing stems partly from federal rules that would require Facebook Inc. to begin disclosing its financial information in April because of its phenomenal growth.

Within days or weeks, Facebook is expected to file papers with the U.S. Securities and Exchange Commission announcing its intent to sell stock. As part of the filing, Facebook will release a prospectus with detailed financial information, including its revenue and income.

The actual sale of stock typically occurs about three months after the initial filing.

Beyond minting an estimated 1,000 new millionaires at the company, Facebook's initial public stock offering could provide a huge boost to Wall Street investment banks sorely in need of a hot stock to excite investors. The right to manage the initial public offering will also generate an estimated $250 million in fees.

"This will be the largest IPO of the year for sure and probably of the decade," said Max Wolff, senior analyst at GreenCrest Capital Management in New York. "There is literally a fortune in fees, which is occurring in a slow market. There's also bragging rights. These firms want to be able to go to their clients and offer them an allocation of the Facebook IPO."

Facebook is expected to raise $10 billion in the offering, giving it a market capitalization of $100 billion. Google, by comparison, raised $1.9 billion in its IPO in 2004.

Shares of Google skyrocketed on their opening day, and analysts expect Facebook shares to do the same.

"The minute the IPO is filed, there will be pandemonium," said IPO Boutique's Scott Sweet, who says he has never seen anything quite like the pentup demand for Facebook shares.

Facebook has become one of the world's best-known consumer brands and the Web's most popular hangout. And sometime this year it's expected to hit 1 billion users. That's half of all people on the Internet and one in seven people on the planet.

Mark Zuckerberg founded the company in his Harvard dorm room at age 19. Now 27, Zuckerberg's stake in Facebook will be worth an estimated $20 billion after the IPO — making him one of the world's richest men.

The company's success lies in the hoard of information it holds about its users — valuable information that advertisers can use to target their products and services. Now Facebook is looking to build a war chest from the IPO to dominate the Web for decades.

Investors clamor for Facebook's IPO 01/27/12 [Last modified: Friday, January 27, 2012 9:55pm]
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