Facebook's IPO one of the world's largest, prices at $38 per share

May 18, 2012

Fb_Lounch


New York, May 18: Facebook's initial public offering of stock is shaping up to be one of the largest ever. The world's definitive online social network is raising at least $16 billion for the company and its early investors in a transaction that values Facebook at $104 billion.

It's a big windfall for a company that began eight years ago with no way to make money.

Facebook priced its IPO at $38 per share on Thursday, at the high end of expectations. The IPO values Facebook higher than Amazon.com and other well-known companies such as Kraft, Disney and McDonald's.

Facebook's stock is expected to begin trading on the Nasdaq Stock Market sometime Friday morning under the ticker symbol "FB." That's when so-called retail investors can try to buy the stock.

Facebook's offering is the culmination of a year's worth of Internet IPOs that began last May with trailblazer LinkedIn Corp. Since then, a string startups focused on the social side of the Web have gone public, with varying degrees of success. It all led up to Facebook, the company that's come to define social networking.

"They could have gone public in 2009 at a much lower price," said Nick Einhorn, research analyst at IPO investment advisory firm Renaissance Capital. "They waited as long as they could to go public, so it makes sense that it's a very large offering."

Facebook Inc. is the third-highest valued company to ever go public, according to data from Dealogic, a financial data provider. Only the two Chinese banks have been worth more. At $16 billion, the size of the IPO is the third-largest for a US company. The largest U.S. IPO is Visa, which raised $17.86 billion in 2008. No. 2 is power company Enel and No. 4 is General Motors, according to Renaissance Capital.

The $38 is the price at which the investment banks orchestrating the offering will sell the stock to their clients. If extra shares reserved to cover additional demand are sold as part of the transaction, Facebook Inc. and its early investors stand to reap as much as $18.4 billion from the offering.

For the Harvard-born company that reimagined online communication, the stock sale means more money to build on the features and services it offers its 900 million global users. It means an infusion of funds to hire the best engineers to work at its sprawling Menlo Park, California, headquarters, or in New York City, where it opened an engineering office last year.

And it means early investors, who took a chance seeding the young social network with start-up funds six, seven and eight years ago, can reap big rewards. Peter Thiel, the venture capitalist who sits on Facebook's board of directors, invested $500,000 in the company back in 2004. He's selling nearly 17 million of his shares in the IPO, which means he'll get some $640 million.

The offering values Facebook, whose 2011 revenue was $3.7 billion, at as much as $104 billion. The sky-high valuation has its skeptics, who worry about signs of a slowdown and Facebook's ability to grow in the mobile space when it was created with desktop computers in mind. Rival Google Inc., whose revenue stood at $38 billion last year, has a market capitalization of $207 billion.

"There seems to be somewhat of a hype around the stock offering," says Gartner analyst Brian Blau. That, of course, is an understatement.

Facebook's IPO dominated media coverage in the weeks and days leading up to the event. Zuckerberg's hoodie made headlines as did General Motors' decision to stop advertising on the site and rival Ford's affirmation that its Facebook ads have been effective.

There are a few reasons for the exuberance. First, there's Facebook's sheer size and high profile. The company grew from a college-only social network created in Zuckerberg's dorm room at Harvard in 2004 to an Internet phenomenon embraced by legions of people, from teenagers to grandmothers to pro-democracy activists in the Middle East.

Secondly, it's personal.

"It's probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome," Blau says. While most Facebook users won't see a penny from the offering, they are all intimately familiar with the company, so it resonates as something they understand.

And then there's CEO Mark Zuckerberg, who turned 28 on Monday. He has emerged as the latest in a lineage of Silicon Valley prodigies who are alternately hailed for pushing the world in new directions and reviled for overstepping their bounds. He counted the late Apple CEO Steve Jobs among his mentors and he became one of the world's youngest billionaires, at least on paper, well before Facebook went public. A dramatized version of Facebook's founding was the subject of a Hollywood movie that won three Academy Awards last year, propelling Zuckerberg even further into the public spotlight.

Though Zuckerberg is selling about 30 million shares, he will remain Facebook's largest shareholder. He set up two classes of Facebook stock, building on the model Google co-founders Larry Page and Sergey Brin created as part of the online search leader's 2004 IPO. The dual class structure helps to ensure that he and other executives keep control as the sometimes conflicting demands of Wall Street exert new pressures on the company.

As a result, with the help of early investors who've promised to vote their stock his way, Zuckerberg will have the final say on how nearly 56 percent of Facebook's stock votes.

True to form, Zuckerberg and Facebook's engineers are ringing in the IPO on their own terms. The company is holding an overnight "hackathon" Thursday, where engineers stay up writing programming code to come up with new features for the site. On Friday morning, Zuckerberg will ring the Nasdaq opening bell from Facebook's headquarters.



Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
June 25,2020

Ottawa, Jun 25: Prime Minister Justin Trudeau took his son out for ice cream on Wednesday in his first family outing since Canada started easing out of its pandemic lockdown.

It was also Saint-Jean-Baptiste Day in Quebec province.

Wearing masks, the Canadian leader and his six-year-old son Hadrien were cheered at Chocolats Favoris in Gatineau, Quebec.

According to a pool report, Trudeau said the shop tapped into a federal emergency wage subsidy and business loan in order to weather the pandemic, and "avoid being frozen out of the frozen treat market."

Hadrien is said to have bounced with excitement, settling on a vanilla cone with a cookie topping while dad bought a vanilla cone dipped in chocolate for himself.

Father and son then headed out to the patio, where they doffed their masks to eat their cones.

Canada's provinces and territories declared states of emergency mid-March, closing schools and non-essential businesses in response to the pandemic.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
May 30,2020

May 30: Warning of the tightrope walk ahead as governments battle the coronavirus crisis, Nobel laureate Peter Charles Doherty has expressed concern about densely populated countries such as India relaxing lockdown norms while also describing a complete shutdown as “an economic and social impossibility”.

The Australian immunologist, who cautioned that the number of COVID-19 cases will rise in the coming days, said the earliest time frame for an effective vaccine “going into large numbers of people” is nine to 12 months.

"If all goes well with testing, we could know if some of the candidate vaccines are both safe and effective as early as September/October. Then, rolling a vaccine out will depend on the type of product and how quickly it can be made, put in vials and so forth," Doherty told PTI in an email interview from Melbourne.

The novel coronavirus, he added, does not change fast like influenza and, from what is known so far, “the same vaccine should work everywhere”.

Doherty, who is with the Department of Microbiology and Immunology at the Doherty Institute, University of Melbourne, won the Nobel Prize for Medicine in 1996 for his discovery of how the body’s immune system distinguishes virus-infected cells from normal ones.

Discussing the lockdown, he said, "If it was purely a matter of hard science, everywhere should stay locked down. But that’s pretty much an economic and social impossibility.”

The expectation, he said, is the numbers will rise and limiting spread will depend on people acting responsibly and the capacity for rapid response and extensive contact testing.

“And in a densely populated country like India I think that it will be very difficult," the scientist said.

Several countries, including India, began relaxing lockdown norms in mid-May despite the WHO’s warning about a second wave. India’s lockdown began on March 25 and has since been extended. The fourth phase ends on Sunday.

Asked whether there are any alternatives to a lockdown, the 79-year-old said, "There is no other option other than closing borders. South Korea, for example, conducted massive, intensive testing and contact tracing in a wealthy country with a very disciplined population. Otherwise, not till we have effective vaccines."

He added that he personally doesn’t see the point of closing borders for people coming in if there’s already a high incidence of disease in the community, “unless it’s to avoid the need to care for them and use scarce hospital beds".

According to Doherty, the coronavirus "is a new virus which has come straight out of nature".

“It (the virus) has moved so rapidly across the world because of people travelling on international planes as well as tourist ships," he added.

The immunologist also warned against the use of hydroxychloroquine to treat COVID-19, and said current and planned trials of the anti-malaria drug should be stopped.

“My understanding is that the use of the drug in severe disease is definitely contra-indicated, but it’s not yet clear whether, if taken under medical supervision, it could have some useful effect if taken early on, or as a preventive. Those trials just haven’t been done properly," Doherty noted.

The Indian Council of Medical Research (ICMR) has backed the use of hydroxychloroquine as a preventive against COVID-19 even after the WHO suspended clinical trials of the drug citing safety concerns.

Asked whether plasma therapy can be an effective treatment for COVID-19, Doherty said, "We lack good properly controlled trials but, especially if the plasma has been tested for antibody levels and there’s evidence of good activity, it could be helpful. If I had the disease and was offered plasma therapy I would certainly accept, but I would not take hydroxychloroquine."

Doherty is also very optimistic about herd immunity developing against the SARS-CoV-2 infection.

"We think that (herd immunity) will cut in and have an obvious effect when, say, 60 per cent of people have been infected. Best hope is to boost herd immunity with a vaccine," he stated.

Herd immunity is a form of indirect protection from infectious disease that occurs when a large percentage of a population has become immune to an infection, whether through vaccination or previous infections.

The number of COVID-19 cases have crossed 5.9 million and the fatalities 3,65,000, according to the Johns Hopkins University on Saturday. 

In India, the death toll has risen to 4,971 and the number of cases to 1,73,763, according to the Union Health Ministry on Saturday.

Several states, including Bihar, Uttar Pradesh, Madhya Pradesh, Jharkhand and Chhattisgarh, have reported a rise in number since lockdown norms were relaxed in early May and migrant workers reached home.

In Uttar Pradesh, for instance, the number of infections rose from around 3,000 on May 4 to 6,532 on May 26. Similarly, Bihar’s numbers increased from around 500 to over 2,700 in the period.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
Agencies
July 24,2020

Chengdu, Jul 24: China on Friday asked the US to close down its Consulate in Chengdu in retaliation to Washington's decision to shut the Chinese Consulate in Houston.

A statement by the Chinese Foreign Ministry said China has informed the US Embassy of its decision to withdraw its consent for the establishment and operation of the US Consulate General in Chengdu.

This was in response to "unilateral" decision by the US to shut the Houston Consulate. China's decision is legitimate and necessary response to the unreasonable actions of the US, it said.

The US on Wednesday ordered the closure of the Chinese consulate in Houston, a move it said was aimed "to protect American intellectual property and private information."

Reacting strongly to the US move, Chinese Foreign Ministry spokesman Wang Wenbin termed it as an "unprecedented escalation and warned retaliatory measures.

China on Thursday said that "malicious slander" is behind an order by the US government to close its consulate in Houston, Texas, and maintained that its officials have never operated outside ordinary diplomatic norms.

Wang said the order to close the consulate violates international law and basic norms governing international relations, and seriously undermines China-US relations.

This is breaking down the bridge of friendship between the Chinese and American people, Wang said.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.