Facebook now valued at $104.2 billion on the eve of NASDAQ stock exchange trading
Facebook has raised its flotation price to $34-$38 a share for when it begins trading on the NASDAQ stock exchange on Friday which values the social network at $104.2 billion - the most expensive US company to go public.
Media Guardian reports today that the initial public offering price of $28 to $35 has been ‘swamped’ - confounding sceptics who say the social network is overvalued.
It points out: “But it came as US carmaker General Motors confirmed it would stop paid advertising on the site, worth about $10m to Facebook, after executives reportedly decided the paid-for ads had little impact on consumers.
“The carmaker, America's third biggest advertiser, said it would continue with free Facebook pages marketing its vehicles.”
In a regulatory filing, the company founded by Mark Zuckerberg, who celebrated his 28th birthday on Monday, said it was planning to raise $12.8bn (£7.99bn) by selling 12.3% of the company, implying the entire company is worth $104.2bn.
According to Media Guardian, the numbers will value Facebook on a par with online shop Amazon and break the record held for over a decade by United Parcel Service, which went public in 1999 valued at $60.2bn.
Analysts said there was so much interest in the Facebook stock that some underwriters closed their order books on Tuesday. A final price is expected tomorrow.
"They're swamped with the orders that are in," said Jon Merriman of investment firm Merriman Holdings, in San Francisco. "They just need time to determine the price. They can send the message – the books are closing, send in your orders now."
Facebook will be priced at 26 times the past 12 months' sales, more than double Google's valuation when the search-engine operator went public in 2004. Google raised just under $2bn in 2004, while Zynga's float drummed up $1bn.
Facebook made $3.7bn in revenue and $1bn in profits last year, but both were down in the first quarter compared with the Christmas period, a drop attributed to seasonal trends in advertising.
According to Media Guardian, Facebook declined to comment.