Facebook to increase IPO price range Tuesday (rumor)

Facebook to increase IPO price range Tuesday (rumor)

Summary: Facebook wants to increase its initial public offering (IPO) price range from $28-$35 to $35-$40 per share, according to a recent rumor. Facebook would thus raise between $11.81 billion and $13.50 billion.

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As expected, Facebook is reportedly going to increase its initial public offering (IPO) price range. In fact, it could happen as soon as tomorrow.

Earlier this month, Facebook set a $28 to $35 IPO price range. Given the sale of some 337.4 million shares, this means the company could raise between $5.04 billion and $6.30 billion for itself, as well as between $4.41 billion and $5.51 billion for its investors. The company estimated it will likely net $5.6 billion from the offering if it achieves a mid-point price of $31.50 per share.

At the time, I wrote that the price range wasn't final:

It could climb even higher in the coming days, since companies regularly tweak their pricing information after they've issued the first pricing range. Whether or not Facebook's valuation will grow will depend on demand seen by the firm's investment bankers during the company's roadshow, which the company will start preparing for tomorrow.

It could also drop. In its fourth IPO amendment, Facebook released Q1 2012 financials. Revenues followed typical trends, but profits were down.

Personally, I thought it was likely to go up as the final date draws closer. That's what we're hearing today, although it's still unconfirmed. CNNMoney reporter Maureen Farrell just sent out the following message on Twitter:

Source says Facebook's underwriters will likely increase the IPO's price range to $35 to $40 tomorrow #FB

Raising its IPO offering range from $28-$35 per share to $35-$40 per share is quite a bold move. It means the company's high-end projection would suddenly become its low-end projection.

Facebook is offering 180 million shares of its Class A common stock and the selling stockholders are offering 157.42 million shares of Class A common stock. Given the sale of some 337.4 million shares, this means the company could raise between $6.30 billion and $7.20 billion for itself, as well as between $5.51 billion and $6.30 billion for its investors. The total would range from $11.81 billion to $13.50 billion.

Facebook is widely expected to start trading on the Nasdaq this week under the "FB" ticker. Many believe this Friday is the big day; shares will be priced on May 17, with trading beginning on May 18. This rumor will have to beat out another one, which says there could be a delay.

Update at 5:00 PM PST - CNBC has its own estimates, posted on Twitter (1, 2):

BREAKING NEWS: Facebook revising range to $34-$38; expected to refile with with new range tomorrow - Source (via @KateKellyCNBC) (More) BREAKING NEWS: New range values Facebook from $92B to $103B - Source (via @KateKellyCNBC)

This price range would be narrower by three dollars when compared with the first one.

See also:

Topics: Social Enterprise, Banking, Legal

Emil Protalinski

About Emil Protalinski

Emil is a freelance journalist writing for CNET and ZDNet. Over the years,
he has covered the tech industry for multiple publications, including Ars
Technica, Neowin, and TechSpot.

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