It took four months to finally get their paperwork in order with the SEC but Facebook on Thursday finally announced the initial cost of its IPO shares which will enter the market at a price of $38. At that price Facebook will have a market share of $107 billion, making it the largest IPO in tech industry history and at $16 billion the second largest IPO in market history behind only Visa’s 2008 IPO which raised $19.7 billion. If you include General Motors’ second IPO following the government bailout which raised $18.1 billion Facebook falls into third place.
Interest in Facebook shares has reached a fever pitch which caused the company’s intermediaries to halt any further trading to individual buyers on Tuesday just three days before the company was set to go public.
33 underwriters including Morgan Stanley are responsible for selling the company’s shares, most of which will go to large institutional investors, mutual funds and hedge funds. Shares to institutional buyers are given out on Thursday night for resale when the Nasdaq opens on Friday.
In the meantime markets will open at 9:30 am ET on Friday but Facebook will likely have to wait an hour or more before it can officially begin trading on the open market, a standard delay for IPOs.
While Facebook will likely be valued around $81 billion on the day of its IPO, Facebook employees and executives hold nearly 2.8 billion unexercised shares which pushes the company’s valuation to $107 billion.
Many Facebook employees may choose to exercise their stock options in the days and months to come but one person selling some of their shares will be founder Mark Zuckerberg who will unload 30.2 million shares for a net of $1.1 billion, much of which will go to pay a massive tax bill he’ll be hit with after the company goes public.
After his stock sale Zuckerberg will control 503.6 million shares, retaining a 31% stake in the company for a personal wealth valuation of $19.1 million.