Despite the storm in a teacup over Mark Zuckerberg’s wardrobe, shares for the Facebook IPO are in such high demand that they have already been oversubscribed. Analysts say that the 337 million shares pitched to be sold between $28 and $35 each when trading begins on 17th/18th May, will probably start trading at the high end of that bracket. The company could raise over $13 billion and be valued at approximately $90 billion if this is the case.
A source, speaking to Reuters, said a large institutional investor with a major order already for Facebook IPO shares has been ringing round trying to secure even more. The Facebook IPO roadshow was hit by several showers of bad news this week which people thought might rain on their promotional parade but appear not to have dampened demand.
Clouds over the IPO
- Mobile advertising problem in the Facebook mobile app, and mobile is becoming more popular.
- Instagram deal being delayed by American Trade Commission investigation.
- Zuckerberg’s hoodie wearing shenanigans as reported on heavyweight financial sites Bloomberg and Forbes among many others.
- Concerns about long term growth. Though most analysts are OK with short term profitability with cnet reporting some have a 12 month price target of $46.
The IPO sounds like it will be quite an event. With 900 million users there is plenty of potential for Facebook to make a lot of money while it is still the favoured social network, but is it overvalued already? Are any HEXUS readers going to buy some of these shares when they hit the markets? It will take a lot of nerve to invest and I expect a spiky first day or three of trading.