Facebook Raises IPO Price Range

Facebook CEO Mark Zuckerberg
Zuck. Photo: Yuriko Nakao/AFP/Getty Images

Facebook has reportedly increased the price range for its upcoming initial public offering to $34–$38 per share for a piece of the social networking giant. The previous price range was $28–$35 a share, based on a valuation of roughly $86 billion; the valuation will be $93 billion to $104 billion under the new scheme, which may be announced in a regulatory filing as soon as Tuesday, reports Bloomberg. Based on a $104 billion valuation, the eight-year-old Menlo Park, California–based company would raise as much as $12.8 billion.

Dueling story lines emerged last week about investor demand for the stock during Facebook's roadshow, which wraps this week. A Bloomberg report said that the IPO had so far generated "lower-than-expected demand" from institutional investors, while a Reuters report claimed that the IPO was oversubscribed and that Facebook might even raise its offering price, a prediction that materialized. On Monday, A New York Times source attributed the price increase to "rampant investor demand." The Wall Street Journal concurs that the price increase signals growing investor appetite.

“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.”

Yet some skepticism lingers, in part because of concerns over Facebook's ability to grow and in part owing to a recent revenue decline: The company's first-quarter profit and revenue dipped from the fourth quarter of 2011. Facebook cited seasonal trends in advertising for the decrease. According to a just-released Associated Press–CNBC poll, half of Americans think Facebook is "overvalued" and a passing fad. Nevertheless  investors across the nation are jacked up for the biggest Internet IPO ever and, good or bad, want a piece of the action.

On Friday, the company will go public on the NASDAQ stock market under the ticker “FB.” Zuckerberg's baby is all grown up.