Facebook Inc. plans to raise the price range for its initial public offering to $34 to $38 a share from the previous range of $28 to $35, according to a person with knowledge of the matter.
The new range may be announced in a regulatory filing as soon as today, said the person, who asked not to be identified because the plans haven’t been made public.
Facebook, already planning the largest-ever Internet- company IPO, would raise as much as $12.8 billion and seek a valuation of as high as $104.2 billion, based on the upper end of the new range. Chief Executive Officer Mark Zuckerberg, in a roadshow to pitch the IPO to investors, may be winning over skeptics who initially balked at buying the shares, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business,
“Raising the range would be the best signal of what the underwriters are hearing from their institutional buyers who have seen the roadshow,” Gordon said. “Despite the doubts, the buyers like what they’re hearing.”
At the upper end of the new range, Facebook would be valued at 26 times trailing 12-month sales, more than double Google Inc.’s valuation when the search-engine operator went public in 2004. The company was already in a position to surpass United Parcel Service Inc. as the most valuable company in history to go public in the U.S., based on market capitalization, data compiled by Bloomberg and Dealogic show.
The higher price range was previously reported by CNBC.
Larry Yu, spokesman for the company, declined to comment.
‘Swamped’ With Orders
Facebook plans to stop taking orders today for its initial public offering, two days ahead of schedule, a person with knowledge of the transaction said yesterday. The offering of
337.4 million shares is oversubscribed, according to people with knowledge of the matter, who declined to say by how much orders exceeded the amount of stock being offered.
“They’re swamped with the orders that are in,” said Jon Merriman, chief executive officer at investment firm Merriman Holdings Inc. in San Francisco. “They just need time to determine the price. They can send the message — the books are closing, send in your orders now.”
Some institutional investors had balked at buying into Menlo Park, California-based Facebook over concern about the site’s growth prospects, people with knowledge of the matter said last week. In a Bloomberg Global Poll of more than 1,250 investors, analysts and traders, 79 percent said Facebook doesn’t deserve such a high valuation.
“Facebook’s pricing seems to be quite expensive,” said Yves Maillot, head of investments at Robeco Gestions SA in Paris, who helps oversee $6.8 billion. The IPO is also pressing ahead in a “very difficult environment for the U.S. equity market.”
The Standard & Poor’s 500 Index sank 1.1 percent to
1,338.35 yesterday, the lowest level since February, as Greece struggled to form a new government amid mounting concern the nation may leave the euro. The index fell for a second day as financial companies and energy producers led losses among all 10 of its main industry groups.
Facebook initially planned to finish taking orders on May 17, data compiled by Bloomberg show. Its shares will list on the Nasdaq Stock Market under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. are the lead managers for the sale.
Zuckerberg celebrated his 28th birthday yesterday, during the final leg of a marketing tour aimed at building demand for the IPO and convincing investors that Facebook can make money from mobile users.