Hotly Anticipated Facebook IPO Takes Off

Source: Money Watch / CBS News

Newly minted shares of Facebook (FB) were due to start trading shortly after 11 a.m. ET Friday, sending investors scrambling for a piece of one of the hottest IPOs to ever hit the tape. CEO Mark Zuckerberg opened the NASDAQ exchange remotely Friday morning from the company’s Menlo Park, Calif., headquarters. Priced at $38 per share but expected to zoom higher in the early going, the offering could raise $18.4 billion for the social networking web site.

The offering price also means the company is valued at $104 billion — and that’s before any runup in the share price. Even the opening sticker price makes Facebook the biggest-ever valuation by an American company at the time of its offering and the second-largest U.S. IPO ever behind Visa.

At the $38 share price, Facebook ranks as the 36th company in the world, just above French petroleum company Total, and the 23rd largest U.S. company, as measured by stock market value (number of shares outstanding multiplied by the stock price). That makes it larger then and Cisco Systems. It doesn’t rank quite so high when it comes to sales, however — Facebook is 909th in terms of annual revenue.

Facebook earned $1 billion last year on $3.7 billion in sales. That makes for very impressive margins — in other words Facebook keeps $0.27 for every dollar it brings in. But by a common measure of how expensive a stock is, the answer is “very.” The deal also means that the company will start trading at 107 times trailing 12-month earnings, more than every S&P 500 member except Inc. and Equity Residential. Apple, for instance, sells at 13 times earnings. And Apple’s earnings grew faster than Facebook’s last year.

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