Facebook Inc aims to raise about $10.6 billion in Silicon Valley's largest IPO, dwarfing the coming-out parties of tech companies like Google Inc and granting the world's largest social network a market value close to Amazon.com's, Reuters reports.
The eight-year-old social network that began as Mark Zuckerberg's Harvard dorm room project indicated an initial public offering price range of between $28 and $35 a share on Thursday, May 3, which would value the company at $77 billion to $96 billion.
The size of the IPO reflects the company's growth and bullish expectations about its money-making potential as a hub for everything from advertising to commerce.
"We certainly haven't ever seen a tech IPO on this grandiose a scale," said Lise Buyer, a principal with the IPO advisory firm Class V Group.
Buyer, who worked on Google's 2004 IPO, said the question about a company "that's already this big and that is raising this much money is how many of the glory days of growth are in the past versus how many are ahead."
Facebook stands to raise as much as $12 billion at the upper end of its planned range. If an over-allotment or "greenshoe" option is triggered, the company could sweep up a maximum of $13.6 billion, according to a Thursday prospectus.
Facebook is only getting about half, or $5.6 billion, of the estimated $10.6 billion that it would raise at the midpoint of its planned IPO range. About $4.9 billon will go to some existing shareholders.
Facebook's stock could begin trading as soon as May 18, according to a road show schedule obtained by Reuters. The offering's price range can be adjusted depending on Wall Street's response during the road show.
Investors are expected to flock to the highly anticipated IPO, although there have been growing concerns about the social network's longer-term growth and Zuckerberg's majority control.
Facebook will trade at 13 to 16 times the revenue that GreenCrest Capital analyst Max Wolff believes it will generate this year. By comparison, Google, the world's dominant Internet search engine, currently trades at 5.5 to 6 times expected 2012 revenue, he said.
Google's valuation was higher when it went public in 2004, though Facebook's IPO valuation is still higher than Google's was back then, Wolff noted.
Facebook plans to sell 337.4 million shares, or 12.3 percent of the company, in the offering. The capital-raising target far outstrips big Internet IPOs that came before it. Google raised just shy of $2 billion in 2004, while last year Groupon tapped investors for $700 million and Zynga raked in $1 billion.
At the top end of the IPO range, Facebook would rival the market value of Amazon.com and Cisco Systems Inc, which are worth just over $100 billion, and surpass the combined market value of older technology companies Hewlett-Packard Co and Dell Inc.
