Facebook is the world's largest social network, with 845 million active users around the world and roughly 200 million in the United States, or two-thirds of population.
On May3, Facebook set the estimated price for its IPO at $28 to $35 a share, according to a revised prospectus. At the midpoint of the range, the social networking company is on track to raise $10.6 billion, in an debut that could value the company at $86 billion.
The filing was the first time Facebook has officially indicated where its shares will be valued. The company is expected to begin trading on the Nasdaq, under ticker "FB", in mid-may, following an eight-to nine-day road show, according to people familiar with the matter. Given that time frame, Facebook should begin trading may 17 or may 18, these people added.
The roadshow will help the company and its bankers gauge investor demand and settle on a final price, which could be above the expected range. Facebook’s underwriters will weigh a multitude of factors, such as demand, market conditions and how much room to leave for a first day pop. While companies like to see a healthy jump on the first day of trading, a huge pop could mean that the offering was priced far too conservatively.
Investors have been eagerly awaiting the Facebook offering, lured by the prospect of strong growth: in the first quarter, Facebook’s daily active users, a measure of engagement, increased by 41 percent, to 526 million.
Still, Facebook is experiencing the growing pains typical of a technology start-up. While revenue continues to rise, profit sputtered in the first three months of the year, falling 12 percent, to $205 million, as expenses jumped significantly.