With Facebook's initial public offering expected in just a couple of weeks, the social network yesterday amended its IPO paperwork to set a price of between $28 and $35 for its stock. This initial range just gives investors an idea of Facebook's goals: the price it will finally get is likely to be more than that.
A good example is LinkedIn, which held its IPO almost exactly a year ago. The professional networking company set its initial IPO range at $32 to $35 - then increased that the night before its May 19 IPO to $42 to $45. The shares finally sold at $45 each.
In the light of that , commentators said, Facebook was bound to raise the price before its initial sale by at least 15 per cent .
The revised S-1 document filed yesterday is one companies must file with the Securities and Exchange Commission before an IPO. Kevin Landis, of San Jose tech fund Firsthand Capital, told the Wall Street Journal he bought pre-IPO Facebook shares in the past year for $31 to $32 - with the agreement he would not sell any within six months of the IPO.
"The price range may be tactical. They will likely walk the range up," he said.
Many experts thought Facebook would shoot for a valuation of up to $100 billion.
Facebook is also likely to set a record for the amount of cash taken in during an IPO, currently held by Google at $1.9 billion. At the midpoint of the price range, Facebook would rake in $10.6 billion total before expenses.
In the S-1, Facebook said Zuckerberg was selling shares to cover tax liabilities on his option to purchase 60 million more shares in the company.
Whatever happens, Zuck will still be in full control of the company. Even after selling his IPO shares, he will still own more than 500 million Class B shares, which give him enhanced voting powers. It is estimated he will account for 60.9 percent of the voting power in Facebook.