Facebook expecting to net $18B with IPO today 

click to enlarge Some experts said the high IPO price and increased float could limit gains to 10 percent to 20 percent, while others said anything short of a 50 percent jump would be disappointing given the hype. - REUTERS FILE PHOTO
  • Reuters File Photo
  • Some experts said the high IPO price and increased float could limit gains to 10 percent to 20 percent, while others said anything short of a 50 percent jump would be disappointing given the hype.

Facebook Inc. priced its initial public offering at the top of its target range to raise more than $18 billion, as strong demand, particularly from retail investors, fuels anticipation of a big pop in the stock when it begins trading today on the Nasdaq.

Predictions of how much the stock will rise on its first day of trade vary greatly — some experts said the high IPO price and increased float could limit gains to 10 percent to 20 percent, while others said anything short of a 50 percent jump would be disappointing given the hype.

“I think anything over 50 percent will be considered a successful offering — anything under that would be underwhelming,” said Jim Krapfel, analyst at Morningstar. “A lot of retail investors are not concerned about valuation. That’s what is going to drive the first-day pop.”

Facebook, based in Menlo Park, is selling a 15 percent stake priced at $38 a share, giving the world’s largest online social network a valuation of $104 billion.

That puts the 8-year-old company, founded in a Harvard dorm room by Chief Executive Officer Mark Zuckerberg, a valuation akin to that of Amazon.com. and exceeding that of Hewlett-Packard Co. and Dell Inc. combined.

Investor enthusiasm for Facebook shares comes despite questions about the company’s long-term money-making capabilities, particularly after it reported a quarter-to-quarter revenue slide in April.

“Hundreds of millions of people are extremely passionate about this product. A lot of those people want to be a part of this event, of this company that they have an affinity for. That’s creating a level of excitement for the stock that you don’t normally see,” said Steve Weinstein, an analyst with ITG Research.

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