Facebook’s IPO would be increased by the addition of 85 million shares; Report


Facebook would add approximately 85 million shares to its Initial Public Offering (IPO) making a total of 422 million shares as reported by Reuters.

This expanded size of shares will make Facebook to be the third-largest initial shares selling company after Visa and General Motors in the U.S. history.

[hana-code-insert name=’StumbleUpon’ /][hana-code-insert name=’Reddit’ /]”This is much more a spectacle, a media event and a cultural moment than it is an IPO,” said Max Wolff, an analyst with GreenCrest Capital. “This is not a game of models and fundamentals at this point.”

According to a Tuesday filing, Facebook has increased the target price in response to a strong demand to between $34 and $38 per share from $28 to $35. This would increase the value of the company to approximately $93 billion to $104 billion. This value would be more than the value of the HP and Dell combined.

At this point, the giant social networking company would have a value of about 27 times of 2011 revenue or 99 times that of earnings.

Facebook has about 900 million users. It has $ 1 billion of net income on the revenue of $ 3.7 billion in 2011.

On Tuesday, General Motors has also planned to take advertising out of the Facebook but this would not affect the IPO. “The demand for the IPO probably won’t be affected materially by this,” said Brian Wieser, an analyst with Pivotal Research Group.

Facebook is scheduled to start trading on the Nasdaq on Friday. A host of Wall Street banks are underwriting the offering, with Morgan Stanley, JPMorgan and Goldman Sachs serving as leads.


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