Swamped by demand, Facebook has raised its initial public offering price to between $US34 and $US38 per share, which will make it the most valuable company ever to go public in the US.
Already expected to be the largest-ever IPO for an internet company, Facebook is making its IPO even bigger.
Facebook has been so inundated with demand for its IPO that it has bumped up the price. Photo: AP
The world's largest online social network on Tuesday increased the planned price range for its stock in a filing with the Securities and Exchange Commission. The $US34-$US38 price is up from its previous range of $US28 to $US35.
At the upper limit of $38, the sale would raise about $US12.8 billion. It would value Facebook as high as $US104 billion, making it more valuable than McDonald's and Citigroup.
The move comes amid growing investor excitement about the offering. Analysts are comparing the frenzy surrounding Facebook's IPO to Google's in 2004, though in sheer size the latter pales in comparison.
Facebook founder Mark Zuckerberg, even after the offering, will remain Facebook's single largest shareholder. He will control 57 per cent of Facebook's voting stock and reap $US1.15 billion from the stock he is selling in the float. Photo: Bloomberg
At the same time, half of Americans think the expected value for Facebook is too high, according to a new Associated Press-CNBC poll conducted before the company raised its expected stock price on Tuesday. Only a third of those surveyed said they think Facebook's expected value is appropriate.
Wall Street doesn't share that sentiment.
"Demand is obscenely high," said Scott Sweet the owner of advisory firm IPOBoutique about the offering. That said, he notes Facebook still has to be careful not to increase the price too much, so the stock still does well when it begins trading on the Nasdaq Stock Market, as expected, on Friday.
"This is a deal that literally must work, in that it is so high-profile," he said. "It would really level the IPO market if Facebook flopped."
In terms of the amount to be raised by the company, Facebook would be the fourth-largest U.S. IPO in history, edging out AT&T Wireless, whose 2000 IPO raised $10.6 billion according to Renaissance Capital, an IPO investment advisory firm.
The AP-CNBC survey, meanwhile, found that of average Americans who invest in the stock market, 58 per cent think Facebook's valuation is too high at around $US100 billion. That's larger than well-known companies such as Ford and Kraft but smaller than Google or Microsoft. About 3 in 10 investors called the expected value fair.
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