IPO could value Facebook at up to $96 billion

The logo of social networking website 'Facebook' is displayed on a computer screen.

By msnbc.com staff

Updated at 6:09 p.m. ET: Facebook has set a price range for its initial public offering of $28 to $35 per share, according to a regulatory filing, valuing the company at up to $96 billion and setting the stage for the biggest Internet IPO yet.

The IPO, expected this month, would raise up to $13.6 billion, of which nearly half would go to existing shareholders including company founder and CEO Mark Zuckerberg. The company will raise about $5.8 billion, assuming a midrange price of $31.50 a share, according to the company's filing with the Securities and Exchange Commission.

The preliminary price range would value the company at $77 billion to $96 billion, according to Reuters. That would be far higher than the previous record Internet IPO, which was Google, valued at $23 billion when it went public in 2004.

An IPO at the high end of the range would value Facebook at virtually the same level as Amazon.com, which has a market capitalization of about $103 billion. Facebook had net income of $1 billion on revenues of $3.7 billion last year, compared with Amazon's earnings of $631 million on total sales of $48 billion.

"People are going to be very comfortable with this valuation," Sam Schwerin of Millennium Technology Value Partners told Reuters. He said the price was conservative and predicted underwriters "will walk the range up."

The firm, which owns Facebook shares worth roughly $200 million, is not selling any in the IPO.

Facebook had revenue of just over $1 billion in the latest quarter, up 30 percent from year-ago levels, although profits were down because costs were sharply higher.

A total of 337.4 million shares will be sold in the offering, about 12 percent of the total outstanding.

Zuckerberg, 27, who will continue to dominate the company with 57.3 percent of the voting power under the company's two-class stock system. He could enjoy a $1 billion payday if the company goes public at the $35 level, because he is selling 30 million shares. His remaining stake of 503 million shares would be worth about $17.6 billion at that level.

Many analysts had expected Facebook to price its IPO even higher, at around $40 a share. Max Wolff, an analyst at Greencrest Capital Management, said Facebook had likely toned down the price range for the closely watched public offering because of the current subdued market mood.

“It feels to me that as market sentiment gets less bright, people are getting more nervous,” he told CNBC.

However, the Facebook IPO is still “a very big deal in every sense of the term,” he added, so it’s important for the 33 underwriting banks involved in the deal to see it go well.

The social media juggernaut, which plans to list its stock on Nasdaq under the ticker "FB," is wrapping up its prospectus with regulators and may begin its "roadshow" as soon as Monday, according to reports. During the roadshow, management will give potential investors a presentation touting its business.

Facebook’s roadshow will reportedly span New York, Boston, San Francisco, Chicago, Baltimore and possibly Los Angeles over eight or nine days. Based on that time frame, Facebook, the world’s largest social network, would be ready to go public in mid-May.

If all goes well, Facebook's stock would price May 17 and make its public debut May 18, The Associated Press reported.