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May 18, 2012

Facebook Finally Goes Public, Valued at $104 Billion

By Rory Lidstone, TMCnet Contributing Writer

After months of speculation about the company’s value, how things would change once it became public and even a fake e-mail from founder and CEO Mark Zuckerberg (News - Alert), it’s official: Facebook began trading stock on the Nasdaq Stock Market as of this morning, a day after raising $16 billion in an initial public offering that valued the company at $104 billion. That’s right, $104 billion — more than Amazon.com, Kraft, Walt Disney (News - Alert) or even McDonald’s.



The social network has come a long way from its inception when it had no way to make money — a problem it still has, only with the mobile version(s) of Facebook (News - Alert). Despite this, Facebook priced its IPO at $38 per share on Thursday, higher than some thought was fair, allowing regular investors to buy stock in the company for the first time under the ticker symbol of ‘FB.’

Facebook is actually one of the few profitable Internet companies to go public of late as it had a net income of $205 million in the first quarter of 2012 alone on revenue of $1.06 billion. Meanwhile, in 2011, the company earned $1 billion, up from $606 million a year prior and a far cry from the net loss of $138 million posted in 2007.

While some had reservations toward Facebook’s valuation, Nick Einhorn, research analyst at IPO investment advisory firm, Renaissance Capital, pointed out, "They could have gone public in 2009 at a much lower price. They waited as long as they could to go public, so it makes sense that it's a very large offering."

According to financial data provider Dealogic, Facebook’s valuation is the third-highest in an IPO after two Chines banks — Agricultural Bank of China in 2010 and Industrial and Commercial Bank of China in 2006, which were worth $133 billion and $132 billion, respectively. Similarly, the amount raised by Facebook ranks third among US IPOs behind Enel, a power company, and Visa which raised the most at $17.9 billion in 2008.

Zuckerberg will remain Facebook’s largest shareholder despite selling about 30 million shares — even after the IPO, he will still own 503.6 million share or about 32 percent of the company’s total shares. At $38 per share, his stake in the company is worth $19.1 billion.




Edited by Brooke Neuman
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