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Facebook Prices IPO At $38 A Share


Facebook Inc. (FB) Thursday announced that it has priced its initial public offering at $38 per share, which is at the top end of its estimated price range of $34 to $38.

The company is set to raise $16 billion by pricing its IPO at $38 a share, giving the world's biggest online social network a value of $104 billion, the largest ever IPO for a technology company.

Menlo Park, California-based Facebook said the shares will begin trading on the Nasdaq Global Select Market on Friday, May 18, 2012, under the symbol "FB".

Meanwhile, Facebook has granted underwriters a 30-day option to purchase up to an additional 63.1 million shares at the price to cover over-allotments, if any.

This big offering easily exceeds Google Inc.'s (GOOG) IPO in 2004. Google had raised about $1.67 billion by pricing its shares at $85, giving it a market valuation of $24 billion. Google is currently valued at above $200 billion.

Facebook's IPO comes at a time when question have been raised about the company's revenue growth model. Facebook's first quarter revenues grew 45 percent from last year, but was down 7.5 percent from the previous quarter. Facebook attributed it to seasonal trends and lower ad rates. The company's profit also dropped 12 percent to 205 million from year-over-year period.

On Tuesday, it was also reported that General Motors Co. (GM) intends to stop advertising on Facebook, after the automaker reached a conclusion that advertising on Facebook had little impact on its sales.

This is a worrisome issue because when a big brand like GM sees Facebook ads as not beneficial, chances are that many others too may follow suit. Facebook generates the majority of its revenue from online advertising.

Nonetheless, the attractive part of Facebook is its large number of registered users. Facebook currently boasts of about 900 million global users, with about 500 million of them logging in every day.

Facebook was founded by Mark Zuckerberg, along with Havard mates Dustin Moskovitz, Chris Hughes and Eduardo Saverin, in his Harvard university dorm room.

Yesterday, Facebook upsized its initial public offering by 25 percent a day after it raised its estimated price range, based on the strong investor demand for the IPO.

The offering was increased after selling shareholders, which includes Dustin Moskovitz, Accel Partners, Digital Sky Technologies, increased the number of stock they planned to sell to 241.2 million shares, from the previous estimate of 157.42 million shares. Facebook, however, did not change its number of shares offering of 180.0 million.

by RTTNews Staff Writer

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