Facebook's IPO: What we know now

The big day is approaching for investors and the social network.

By MSN Money Partner Apr 23, 2012 6:05PM

By Mark Koba

 

CNBCFacebook is set to raise the roof off Wall Street with its upcoming initial public offering, which has a target valuation on the social-media giant as high as $110 billion.

 

To see where Facebook’s IPO stands now, here are some questions and answers.

 

When will the IPO take place?

All reports point to May of this year. Dates of May 17 or May 24 have been mentioned by people close to the matter.

 

Bankers and Facebook management are currently looking at a target date of May 16 or May 17 to price the deal -- with trading commencing the following day.

 

What might push the deal back to May 24 is Facebook’s recent $1 billion acquisition of Instagram. The Securities and Exchange Commission has to okay the deal, and while that’s expected there could be some unforeseen complications that push the May 17 date back a week or so.

 

Facebook filed for its IPO on Feb. 1, 2012.

 

Why did Facebook buy Instagram before the IPO?

Many analysts believe the move was simply to increase the IPO value of Facebook. But the deal may have been the sole brainchild of CEO Mark Zuckerberg according to some reports.   He evidently informed the Facebook board of directors of the deal after he concluded the negotiations. The board's approval of the deal was described as largely "symbolic."

 

Instagram is a free photo sharing program launched in 2010 that allows users to take a photo, apply a digital filter to it, and then share it on a variety of social networking services.

 

How much will shares of Facebook cost?

Recent transactions on the private market put estimates of the price of a single Facebook share at between $38 and $40.

 

What exchange is Facebook going to list on?

Facebook has chosen the Nasdaq over the New York Stock Exchange. The NYSE is widely seen as the home of the traditional “blue chip” company, while the Nasdaq’s reputation is more associated with Silicon Valley -- and more to Facebook’s image.

 

Who is handling the IPO for Facebook?

Some 31 banks are advising on the deal, but the main players are Morgan Stanley, JPMorgan, Goldman Sachs, Bank of America, Barclays and Allen & Company.

 

How much money is Facebook expected to raise with the IPO?

At least $5 billion, according to most analysts’ estimates. That would make it the largest Internet-related IPO on record.

 

When can investors jump in to buy Facebook stock?

The moment the stock debuts on the Nasdaq.

 

However, many market experts say that the problem with immediately jumping into an IPO is that insiders, such as hedge fund managers, are buying up shares that push up the price.

 

Normal traders are advised to wait for a couple of days for the stock price to settle back down.

 

The General Motors (GM) IPO of two years ago is cited as a recent example of seeing a stock price initially go up $6 or $7 higher than the IPO the first day, and then settle back down a day or two later.

 

Here's a quick look at a couple of recent IPOs and how their stocks have fared:

 

Yelp (YELP) -- developer of online games, first day of trading on March 2, 2012:

  • Pricing: $15 per share
  • First-day's close: $24.58, up 64 percent from IPO price 
  • Trading range since IPO: $19.36 to $31.96

Zynga (ZNGA)-- developer of online games, first day of trading on Dec. 16, 2011:

  • Pricing: $10 per share
  • First-day close: $9.50, down 5 percent from IPO price
  • Trading range since IPO: $7.97 to $15.91

How big and profitable is Facebook?

The eight-year-old firm has more than 840 million members, and nearly half a billion people around the world log into Facebook every day, according to the latest statistics.

 

And more Fortune 500 companies have corporate Facebook pages than Twitter aliases, according to Facebook.

 

Facebook had revenues of $3.8 billion in 2011, with an operating profit of $1.5 billion.

 

What happens legally when a firm like Facebook goes public?

The company falls under the guidelines of the SEC.

 

Facebook will have to follow disclosure rules like holdings and transactions of insiders or the officers and directors of the company. It will have to disclose its financial status on a regular basis and come under surveillance by the SEC on its trading practices. And of course -- it will have to hold shareholder meetings.

 

More from CNBC

6Comments
Apr 24, 2012 3:41AM
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Zuckerberg bought Instagram because he knows facebook is a fad and has the potential to go the way of myspace very quickly.  Instagram was growing very quickly and was a threat to facebook.  Zuckerberg is going public to cash in all he can in case facebook becomes obsolete.   Facebook is a sucker bet.  If the movie, "the social network" is true at all, Zuckerberg has been paid off with the world's largest idea theft in history.  I'm willing to bet it is true since he didn't want a damn thing to do with the movie. 

Apr 24, 2012 7:47AM
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I don't use FB as much anymore - I could go without...I wouldn't miss it all that much.
Apr 23, 2012 9:48PM
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Do I have to have a Facebook account to own the stock? If so, I'm  out.  Sold.

 

Apr 23, 2012 8:31PM
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Check out Donna Kline now about their infringement and S1 filing problems

Apr 23, 2012 11:28PM
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let us always meet each other with a smile, for the smile is the beginning of love, and once we begin to love each other naturally we want to do something.

Look at my name,it is a nice place for older people.



















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