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Facebook’s IPO Tonight: Will You ‘Like’ It?
In the Spotlight | 18 May 2012
By: Louis Kent Lee
Articles (199) Profile

Tonight is the big night for the site you probably use every day. Sorry, I wasn’t talking about Google. You liked this, so and so poked you, you were tagged in your friend’s picture. Can you imagine a world without Facebook now? Exactly.

Long before its stipulated listing date, Facebook has already created so much hype among investors and onlookers, eager to get their hands on a piece of the “likable” pie.

I can go into the history of how Facebook started out from Facebook’s founder Mark Zuckerburg’s Harvard dorm room and swelled into such a big thing today but I don’t really think it’s necessary at this point. Just recall how you first started using it and how long this has lasted compared to other social sites e.g Friendster (who?).

After the announced IPO price of US$38 at its filing on Thursday, Facebook has been priced at the top of its US$34-US$38 range, which puts the company’s total valuation at an open day record of US$104 billion. Tonight, it will be looking to raise an additional US$16 billion, dubbing it the largest tech IPO in history.

CNNMoney reported that according to an IPO ranking tracked by Thomson Reuters, Facebook’s IPO is the third largest IPO in the US, a tad bit behind the US$19.7 billion raised by Visa in March 2008 and the US$18.1 billion raised by General Motors in November 2010.

Is It Too Expensive?
Although much has been debated about whether or not Facebook deserves this valuation and could it be too expensive, others are keen to pay exorbitant prices for a piece of Facebook.

Three days ago, in an interview with Bloomberg Television, Apple Co-founder Steve Wozniak said “he is ready to buy Facebook shares at any price”, and mentioned that Mark Zuckerburg is a “real acute businessman who mixes technical ability with the vision and corporate acumen of Steve Jobs”.

Prior to the Facebook IPO, we’ve seen how LinkedIn jumped on its IPO day when it opened at US$83, a 90 percent jump over its initial price and is now trading past the levels of US$100. Many deemed LinkedIn’s performance as a barometer of Social Media’s acceptance in the investment world and it clearly isn’t looking that shabby.

“I don’t care what the opening price is, I would invest in Facebook,” stressed Woznaik.

Facebook will be trading on the NASDAQ tonight under the ticker FB. With a mere few hours left before the US market opens, the excitement and hype is almost akin to that which is felt before the release of a new iPhone.

Will it be better than anticipated breaking LinkedIn’s high, or will it be an over-hyped share that can’t sustain its price after the first day? Let’s find out shall we.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

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