Facebook IPO To Raise $5B, Filing Wednesday, Morgan Stanley In Lead

http://techcrunch.com/2012/01/31/reuters-facebook-ipo-to-raise-5b-filing-wednesday-morgan-stanley-in-lead/

by brd • 14 years ago

32 29 14 years ago

techcrunch.com

farrel• 14 years ago

$5B with a projected $50B - $75B market cap means less than 10% of FB shares will be on the open market.

Guess they want to keep demand (and the stock price) high...

r00fus• 14 years ago

Same formula as ZNGA (and initially, GOOG). I think this strategy is wise, but "projected market cap" is a bullshit term at 10% openly traded.

My pessimistic take is that, like ZNGA, the wind is no longer at Facebook's back but they have no choice but to go IPO before it gets worse.

avar• 14 years ago

10% also seems even smaller when you take into account all the stock market related regulations they'll have to adhere to because of this.

togasystems• 14 years ago

Should I buy?

zecho• 14 years ago

If you happen to get a trade in, a quick dump might net you quite a bit. There's going to be a frenzy on this IPO.

The ZNGA and GRPN comparisons probably aren't going to be reflective of what will actually happen. Facebook is largely viewed on a tier with AMZN and GOOG.

But, really, you should ask yourself this question again after reading through the SEC S-1 filings when they're released. Make a good long term decision.

nekojima3• 14 years ago

I'd suggest a sophisticated investor would hedge with derivatives in anticipation of the substantial downside risk.

At the $100bn valuation there would likely be far more downside risk than upside, despite the likely initial upside buying. Which could last just a few minutes or hours. With the lower $50-75bn valuation, the initial upside is more likely than with the higher valuation, though a flat pricing band for several weeks or months is more probable. Profit capture would be difficult in this scenario.

* These are general comments on Facebook's valuation and is not investment advice, please consult with a registered investment adviser. :-)

secretasiandan2• 14 years ago

Please explain "hedge with derivatives"

(Edit 1)

My issue with what you say : I believe options (the derivatives I assume you're talking about) don't start trading till a while after the stock starts trading.

Furthermore, even if they started trading when the stock starts trading, why do you think you have positive expected value to buy the stock and also buy puts? Why not just buy calls?

If either one of these is positive expected value, why do options market makers sell them at the price they do?

Additionally, your talk about the valuation seems trite : you're more likely to make money if you buy at a $50B valuation than if you buy at a $75B valuation is supposed to be informative?

(Edit 2)

Yes, I see your explanation, but you're (again) not really saying anything.

DrCatbox• 14 years ago

"I'd suggest a sophisticated investor would hedge with derivatives in anticipation of the substantial downside risk."

I see. I know what some of those words mean. Man, actually I dont know what the hell you are saying. Why is it that the finance sector uses a language of its own? I understand each sector has their own quirks and logisms, but finance is the worst, for something that is kind of simple. If have money, you can buy things and sell things. How come you have all these fancy words to mean what exacly?

dmix• 14 years ago

How does this compare to most IPOs?

Is it large or midsized?

mtjl79• 14 years ago

It's one of the largest IPO's in history.

http://www.quora.com/Facebook-Inc-company/Will-Facebook-be-t...

nostromo• 14 years ago

Big. For reference, their current valuation on private markets makes them worth about as much as Amazon.com.

FB on Sharespost: 83.5B

Amazon on Nasdaq: 88.4B

wallflower• 14 years ago

What should we be looking for in the S-1?

FJB• 14 years ago

[ad] revenue growth.

secretasiandan2• 14 years ago

One of the commentators on bloomberg (who asserted he always believed that the IPO size would be around $5B, on the lower end of the range) said he thought facebook credits would be a suprisingly large percent of total revenue and ad revenue would be lower than expected.

Reading between the lines: it may net to what everyone expects but the composition is important. It may suggest that Zynga is a good barometer for how facebook itself will fare.

socialist_coder3• 14 years ago

I am always curious why companies like this want to IPO. Do they really need the cash in order to further grow their company?

Or is it solely for compensation of their founders & employees?

furtivefelon• 14 years ago

they passed 500 stockholders, so they must go public, per rule of SEC

frisco• 14 years ago

The 500 stockholders rule says nothing about going public. It says that they must adhere to the same onerous reporting requirements as public companies. Therefore, many companies choose to go public at that point and get some of the benefits along with the complexity.

(Also, it's worth noting that Facebook was exempted from that rule in 2008, anyway. See http://www.sec.gov/Archives/edgar/vprr/08/9999999997-08-0430...)

socialist_coder3• 14 years ago

Wow, I learn something new every day. Thanks.

tocomment2• 14 years ago

So all I have is a dinky etrade account. Whats the best way to buy some of this?

Specifically if I put in an order the night before will it be executed sooner? Should I do a market order or a limit order?

seagreen2• 14 years ago

Never buy individual stocks. Buy mutual funds.

rfurmani• 14 years ago

I feel much more comfortable investing in a few companies that I feel are strong than investing in a mutual fund that will roughly end up tracking the market as a whole, and invariably ending up with a dangerous bet on the market going up. (unless it's perhaps a fund like FNSAX)

getsat• 14 years ago

Trailing stop loss order.

tocomment2• 14 years ago

I don't see that choice. Would it have another name?

michaelochurch• 14 years ago

Stay out. Investment bankers (henceforth, "eye-wankers") underprice IPOs as a way of skimming money into the paws of their scumbag clients, but if you're not well-connected in scummy circles and therefore can't get allocated into the IPO, then by the time you can purchase the stock (not participating in the IPO, but trading on the open market in the following day) this opportunity has vanished.

IPOs are a disaster for ordinary investors. If the IPO's good, banks will reduce your allocation to let important clients in. If it's a dud, they'll let you get in as deep as you want. So you face adverse selection.

Also, definitely do not make a market order on the day of an IPO.

socialist_coder3• 14 years ago

To everyone asking "how do i buy this stock at IPO?"- please think long and hard about this. Do you really want to buy on day 1 when the scam underwriters on Wall Street have already sold the stock to their institutional investors at a 10-20% profit? That profit is coming from you, the pig investors who will buy at day 1, see a tiny drop instead of the big bump you expect, and then sell for a loss. If you aren't a seasoned trader, just stay away.

TL;DR- If you have to ask, you probably shouldn't do it.

rluhar• 14 years ago

Would you care to elaborate on how exactly this "scam" works?

The job of the underwriter is to guarantee that a certain amount of stock is sold at the point of IPO. They are paid to canvas their clients and market the IPO. That is what they do. I would strongly recommend you try and understand how IPOs work and how capital is raised before you bring out the pitchforks.

If you are curious, I would recommend reading the blog post below which will explains, probably better than I ever could.

http://epicureandealmaker.blogspot.com/2011/05/jane-you-igno...

[EDIT]: Let me just add - yes, the underwriters may offer the stock to their clients at a rate that may be lower to where the market goes when the shares start trading. The underwriter's clients may decide to take profit in the first few days if the price shoots up. The stock price will be volatile either way. So if you are considering buying Facebook stock, and are prepared to hold for a while, buying at the time of opening may be OK. If you are afraid of short term volatility, wait until the price settles down.

Facebook IPO To Raise $5B, Filing Wednesday, Morgan Stanley In Lead

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