Facebook goes express to mega-cap status — now valued more than AT&T, Coke

NEW YORK — In the days after its infamously mishandled initial public offering in May 2012, it looked as if Facebook would struggle to become a must-own for fund managers.

Now the company’s $190 billion market value makes it bigger than such bellwethers as Coca-Cola and AT&T. It’s not a member of the Dow industrials, but if it were, it would be larger than two-thirds of that index’s 30 members.

Shares of the world’s No. 1 social network touched a record high of $76.74 on Thursday after earnings and revenues easily topped analysts’ forecasts, boosting its market value to nearly $194 billion. That ranks it 15th in the Standard & Poor’s 500 benchmark index, just below the $196 billion market cap of International Business Machines Corp.

“A 100-year-old company with real assets versus a company admittedly with virtual assets and they are trading at the same market cap – crazy,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

The speed of Facebook’s rise to mega-cap status is what’s notable. It took Apple Inc nearly three decades to achieve such a market value; Google Inc needed five years.

Facebook has only been public for a little more than two years, and only joined the S&P 500 seven months ago. Since S&P Dow Jones Indices announced the addition on Dec. 11, Facebook shares have risen 54 percent.

The gains represent a reversal of fortune for the social media company. After a botched IPO that infuriated investors in May 2012, the stock slumped, underperforming for 15 months before finally eclipsing its offering price of $38 in August 2013. Since then, Facebook shares have been unstoppable, doubling in less than a year.

“People understand the world is moving to mobile, and when you look at the time spent on mobile, Facebook has the lion’s share,” said Walter Price, senior portfolio manager and managing director of the AllianzGI Global Technology fund, which owned more than a million shares as of June 30.

The firm has leveraged its position by selling put options, or negative bets on the stock, and buying more call options, or bets on the shares rising further. “This is a momentum stock you can put a P/E on,” Price said.

Facebook’s rally has left e-commerce giant Amazon Inc in the dust. That company’s value peaked around $187 billion in January, but closed Thursday at $165 billion. Amazon reported disappointing results afterwards, which dragged down its stock by 7 percent, valuing the company around $153 billion.

Facebook’s market cap is still dwarfed by the roughly $403 billion in combined market cap for the two classes of Google shares, arguably the most similar in terms of revenue generation. However, Facebook tops The Coca-Cola Co by about $15 billion and Disney by more than $40 billion.

Shot, quick trip

Apple, the S&P 500′s most valuable company, needed nearly three decades before its market value finally rose to more than $190 billion, surpassing that level in late December 2009.

Google’s move was swifter. The company went public in August 2004, and posted a closing market value of more than $190 billion for the first time in October 2007, right around the S&P’s peak before the financial crisis.

That’s not to say there aren’t detractors. StarMine, a Thomson Reuters company, sees Facebook as more overvalued than 95 percent of the companies in its stock universe. Using expected growth rates over the next decade, StarMine puts an intrinsic value of $29 on the stock. It has a high price-to-earnings ratio of 42, more overvalued than 90 percent of the stocks StarMine tracks.

However, the stock’s relentless march has left few willing to stand in its way. Investors betting on the stock falling have dried up. In August 2012, more than 80 percent of shares available for short bets were being borrowed by investors expecting the stock to drop, according to Markit. Now, just 0.4 percent of shares available are being used for short bets.

Of the 43 analysts with recommendations on the stock, 37 are “strong buy” or “buy” ratings, with six “hold” ratings.

“If you were looking to short names that were ridiculously overvalued and people were not even thinking the growth was going to continue, I wouldn’t put Facebook in that category,” said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco.

“That being said, do I buy Facebook here? From my perspective, I am a value investor – I wouldn’t get anywhere near it with a 10-foot pole.”

That acceptance of Facebook’s legitimacy as a successful and viable company makes the comparison to the classic names that now surround it on the market cap list more palatable.

“In some respects, Facebook speaks to a demographic shift in the way retailing, social media and virtually every other component of people’s lives is being bundled,” said Peter Kenny, chief market strategist at Clearpool Group in New York.

“Investors are starting to see the brilliance of this platform in ways that haven’t to date really captured the imagination of many.”

source: interaksyon.com

Mark Zuckerberg Made $3.5 Billion Last Month

November was a good month for Facebook and its CEO Mark Zuckerberg.

Facebook‘s stock shot up from $21.08 a share on the first day of trading in November to $28 a share at the end of the day Friday, its highest price since July. Zuckerberg, who owns about 504 million shares of Facebook stock, gained about $3.48 billion as a result.

When Facebook first went public at $38 a share in May, Zuckerberg’s shares were worth $19.1 billion. In the following months, the stock dropped to less than half that IPO price to $17.55 in late August, pushing Zuckerberg’s net worth down to $8.84 billion.

Since then, Facebook’s stock has recovered in fits and starts and so has Zuckerberg’s wealth. November proved to be by far the most robust growth month for the stock to date, thanks to two big factors. First, the company had a strong earnings report in late October, which showed that Facebook was making progress in monetizing mobile. Secondly, the second and largest lockup period for stocks held by employees finally expired in the middle of November, which was something investors had been dreading for months and arguably held down the stock price.

As of Friday, Zuckerberg’s net worth was $14.1 billion and will likely only continue to grow in December.

Facebook’s stock is approaching $30 a share and analysts continue to raise their price targets for the stock on the potential to generate money from mobile ads and other revenue sources like the recently launched Gifts service. Arvind Bhatia, an analyst with Sterne Agee, upped his price target on the stock last week from $26 a share to $32 a share. Likewise, Topeka Capital raised their price target from $34 a share to $36 a share.

Perhaps Zuckerberg and Facebook will manage to end this year on an up note after all.

source: mashable.com

Tomorrow Is a Big Day for Facebook’s Stock

The New York Stock Exchange and the NASDAQ are both planning to re-open on Wednesday after having ceased all trading for two days as a result of Hurricane Sandy. For some employees at Facebook, Wednesday probably can’t come soon enough.





The first of three big lockups for Facebook stock expired on Monday, giving employees the option to sell off their shares in the company for the first time since Facebook went public in May. In total, 234 million shares of Facebook stock were freed up as part of the lockup expiration, but because the stock market was closed, employees and shareholders have been unable to trade that stock so far this week.

That all changes on Wednesday.

Facebook employees have spent more than five months watching as the company’s stock plummeted from its IPO price of $38 a share to as low as $17.55 in early September, without having the option to sell off any of their shares. CEO Mark Zuckerberg reportedly acknowledged to employees that the declining stock price was “painful” to watch for all.

On the day that the stock hit its all-time low, Facebook announced that it would bump up the first lockup expiration date for employees from Nov. 14 to Oct. 29, which some argued was an attempt by the company to boost employee morale. Since then, Facebook’s stock has staged a bit of resurgence and currently sits at $21.70 a share. While that’s well above the low point, it’s also still well below the IPO price — in fact, as of earlier this month, Facebook employees had lost an average of $2 million each since the IPO.

The big question going into Wednesday is how quickly Facebook employees will be to pull the trigger on cashing out their stock. If they flood the market by selling millions of shares, it could send a signal to investors that even Facebook employees are not confident in the company’s future, which could have a significantly negative impact on the company’s stock price.

A similar situation took place back in August, after the first lockup period expired for 271 millon shares held by Facebook insiders. Peter Thiel, one of Facebook’s first investors, quickly sold off nearly all the stock he owned in the company (about 22 million shares), a red flag for investors that hurt the price of the stock.

The average Facebook employee selling this time around certainly doesn’t have 22 million shares to sell, but if employees begin to sell off en masse, it could have a similarly damaging impact on the stock. What’s more, in two weeks, another lockup period will expire for a whopping 777 million shares, which could disrupt the stock’s performance even further.

source: mashable.com

Zuckerberg eyes mobile focus after Facebook IPO flop

SAN FRANCISCO — Facebook founder Mark Zuckerberg said Tuesday he was steering the social network giant to focus more on mobile, saying it would help ease concerns after a “disappointing” stock market debut.

“The performance of the stock has obviously been disappointing,” Zuckerberg said during an on-stage interview at a TechCrunch Disrupt conference in San Francisco.

Facebook has made a priority of following its more than 900 million members onto smartphones and tablet computers, tailoring services and money-making ads for mobile devices.

“It is really clear from the stats and my own personal intuition that a lot of energy in the ecosystem is going to mobile, not desktop (computers),” Zuckerberg said.

“That is the future,” he continued. “We are going to be doing killer stuff there.”

Zuckerberg was adamant that the company was being underestimated and was on track to make “more money on mobile than we make on desktop.”

Zuckerberg’s appearance at the conference was his first public interview since the massive public offering on May 18 that was hotly anticipated—but ended up being a flop.

Facebook shares have lost around half their value since the IPO at $38 a share.

The shares gained 3.30% on Wall Street on Tuesday to close at $19.43. In after-hours trading following Zuckerberg’s remarks, the stock gained 3.14% to $20.06.

Zuckerberg said that despite the early stock market disappointment, “we’re going to execute this mission about making the world more connected.”

Zuckerberg also rejected criticism that the company is ill-prepared for a shift to mobile devices, where Facebook has only begun to get ad revenues. “Now, we are a mobile company,” he said.

He said the company would pursue its “mission” while seeking to make money for shareholders.

“We are a mission driven company,” Zuckerberg said. “Building a mission and building a business go hand in hand. From the beginning we’ve had this understanding we’ve had to do both.”

Zuckerberg has stated repeatedly, even in pre-IPO paperwork with US regulators, that Facebook did not build great services to make money but made money to build great services.

When pressed on the point, in the context of the California-based company losing more than $50 billion in value based on the stock price drop, Zuckerberg was quick to add that making money was a component of its broader mission.

“People who want to work on a great mission also want to make a bunch of money,” he contended.

Zuckerberg conceded that the stock price plummet has taken a toll on the morale of workers compensated with shares but that Facebook staff are accustomed to criticism and “have a pretty good compass” pointing to better days.

Stock compensation for Facebook employees is made based on cash value of shares, meaning that workers are awarded more shares at lower prices, according to the chief executive.

“I actually think it is a great time for people to join and a great time for people to stay and double-down,” Zuckerberg said of the Facebook team. “I think we are seeing that.”

Zuckerberg rejected suggestions that Facebook would make its own smartphone, adamant that the company had no intention of stepping into the fiercely competitive handset hardware arena.

“Apple, Google, everyone builds phones; we are going in the opposite direction,” Zuckerberg said. “We want to build a system deeply integrated in every device people want to use.”

Zuckerberg’s strategy to have Facebook on every smartphone instead of making a “Facebook phone” makes sense, according to technology analyst Jeff Kagan.

Zuckerberg said Facebook did not plan to go head-to-head with Google in the online search market but that the social network already handles one billion queries a day from people looking for friends, apps, brand pages and more.

“Facebook is uniquely positioned to answer a lot of questions people have,” Zuckerberg said, giving examples such as finding out restaurants friends have eaten at or who has connections at particular companies for jobs.

“At some point we will do it,” he continued. “We have a team working on search.”

Kagan said the Zuckerberg talk at the conference rekindled some of Facebook’s pre-IPO excitement but did not make up for the fact that the company’s stock has been a loser and it remained unclear how profitable it would become.

“Bottom line, Zuckerberg sounded good,” Kagan said. “However this does not solve the investment problem the company still faces every day.”

source: japantoday.com

Nasdaq hikes payout figure for botched Facebook IPO

SAN FRANCISCO — Nasdaq has raised to $62 million the amount of money it will set aside to cover trading losses due to computer glitches that disrupted the launch of Facebook shares onto the market.

The huge electronic market’s foul-up marred the $16 billion Facebook share issue on May 18, the most hotly awaited initial public offering on the U.S. markets in years.

“We deeply regret the problems encountered during the initial public offering of Facebook,” Nasdaq OMX Group chief executive Robert Greifeld said in a statement.

“We have learned from this experience and we will continue to improve our trading platforms.”

Nasdaq in June proposed setting aside $40 million to cover brokers’ losses caused by the botched IPO but the compensation plan immediately ran into criticism as being inadequate.

“After careful analysis, the program has broadened the eligibility by adding a new class of orders to be accommodated in addition to the three classes that were announced in June,” Nasdaq said.

Modifications to the program included priority accommodation for customers of Nasdaq members and making payouts in cash instead of trading credits as originally proposed.

The filing of the proposed plan with US regulators marked the start of a seven-day comment period during which traders can express their views.

Nasdaq said it expected all claims covered by the plan to be paid out within six months.

The stock hit a high of $45 on the first day, but since then has lost nearly 30% from the IPO, slipping to $28.71 in after-hours trading Friday.

The plan requires the approval of the Securities and Exchange Commission, and the independent Financial Industry Regulatory Authority will evaluate claims from the brokers, Nasdaq said.

Facebook’s IPO overwhelmed Nasdaq’s systems when it hit the market, forcing a half-hour delay in opening trading and leaving investors and brokers in the dark for hours over the results of orders involving millions of shares.

Claims of losses related to the market’s computer problems are estimated above $100 million, according to The Wall Street Journal.

The glitch dealt a black eye to the exchange, which trades some of the world’s largest companies, including Apple and Microsoft.

It also sparked reports that the NYSE was trying to woo Facebook away from Nasdaq.

source: japantoday.com

Facebook goes down temporarily

Facebook’s website suffered sporadic outages on Thursday, anywhere from half an hour to two hours according to various blogs, tweets and affected users, but the company said the problem has been fixed.

“Earlier today, some users briefly experienced issues loading the site. The issues have since been resolved and everyone should now have access to Facebook,” company spokesman Michael Kirkland told Reuters.

The outages came as Facebook continued to grapple with the fallout of its botched May 18 IPO. The stock has plummeted nearly 23 percent from its IPO price, and numerous lawsuits have been filed in the wake of first-day trading glitches.

Shares of Facebook closed up 5 percent at $29.60 Thursday on the Nasdaq.

source: interaksyon.com

Facebook shares plunge below IPO price

NEW YORK - Facebook shares plunged more than eight percent below the IPO price of $38 in opening trade Monday, after fizzling in their debut Friday.

Ten minutes into opening trade, the shares were changing hands at $35.01, down 8.43 percent, while the markets generally rose.



After Friday's much-anticipated $16 billion initial public offering, the second largest ever of any US company, underwriters were forced to prop up the shares to keep them from falling below the issue price.

"I think that the underwriters convinced Facebook to offer too much stock," said analyst Michael Pachter of Wedbush Securities after Friday's flat opening.

"The market didn't have sufficient appetite for the number of shares offered."

article source: interaksyon.com

Investors brace for Facebook debut on Wall Street

Investors are bracing for Facebook's Wall Street debut on Friday after the world's No.1 online social network raised about $16 billion in one of the biggest initial public offerings in US history.

Valued at $104 billion, Facebook is larger than Starbucks Corp. and Hewlett-Packard combined, sparking intense speculation on how much higher its valuation will rise once shares start trading.

"A 15 to 20 percent pop is in the realm of possibility," said Tim Loughran, a finance professor at the University of Notre Dame. "Given they already moved their IPO range up and increased the size, that's bullish to begin with."

Facebook priced its offering at $38 a share on Thursday, but the price could be higher when shares begin trading under the FB symbol on the Nasdaq at around 11 a.m. Eastern Time.

Some expect shares could rise 30 percent or more on Friday, despite ongoing concerns about Facebook's long-term moneymaking potential. An average of Morningstar analyst estimates puts the closing price for Facebook shares at $50 on its first trading day.

The IPO, expected to mint more than a thousand paper millionaires at the company, has received wall-to-wall media coverage and sparked hopes of a boom in sales of everything from San Francisco Bay Area real estate to automobiles.

Facebook employees marked the event with an all-night "hackathon" at the company's Menlo Park, California headquarters starting on Thursday evening, a tradition in which programmers work on side projects that sometimes turn into mainstream offerings.

Facebook's 28-year-old founder and chief executive Mark Zuckerberg was expected to ring a bell at the company's Silicon Valley headquarters on Friday morning to kick off trading on the Nasdaq.

Founded in a Harvard dorm room in 2004, Facebook has grown into the world's dominant social network with 900 million users.

At $38 a share, Facebook would trade at over 100 times historical earnings versus Apple Inc.'s 14 times and Google Inc.'s 19 times.

For all the high expectations surrounding Facebook, the company faces challenges maintaining its growth momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones. Meanwhile, revenue growth from Facebook's online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

"With mobile usage growth exceeding desktop, monetization in the near term could be reduced given little-to-no ad coverage on mobile, challenged by limited screen sizes," said a report last week from Susquehanna Financial Group.

GM said on Tuesday it would stop placing ads on Facebook, raising questions about whether display ads on the site are as effective as traditional media. —Reuters

source: gmanetwork.com

Facebook sets $28 to $35 IPO price range

NEW YORK (CNNMoney) -- It's the day techies and investors have been waiting for: Facebook set a price range of $28 to $35 per share for its initial public offering. It also upped the maximum size of its offering to $13.6 billion, up from its previous $5 billion estimate.

Facebook currently has around 2.1 billion shares outstanding, so if its IPO prices at the top of the range, the company would be valued at just shy of $75 billion.

Many Facebook employees and executives, including Zuckerberg, hold unexercised stock options. The company itself is also holding some shares for future employee equity grants. If all of those shares were exercised, Facebook's outstanding share count would rise to around 2.8 billion, pushing its valuation closer to $98 billion.

Facebook's target price range isn't binding, and could change several times before Facebook actually makes its debut. The company will set its final price the night before it begins trading. That's expected to happen sometime in mid-May, with May 18 the current target date.

Institutional investors who purchase shares directly from Facebook's underwriters, including lead banker Morgan Stanley, will buy in at the IPO price. Regular investors will get their shot the next day, when Facebook begins trading on the tech-heavy Nasdaq exchange under the ticker "FB."

The target range set on Thursday could be lowballing. Facebook said in a filing last month that it internally valued its shares at $30.89 each, as of January 31 -- up from $29.73 a month earlier.

Facebook's user base is growing. The site had 901 million monthly active users as of March 31, up 33% compared to the same date last year. User growth is fastest in Brazil, India, and the United States, Facebook said.

Zuck's windfall: Facebook CEO and founder Mark Zuckerberg plans to sell 30.2 million shares in the IPO offering. If Facebook prices at the top of its range, that will net Zuckerberg about $1 billion -- cue the Sean Parker "you know what's cool?" jokes.

But Zuckerberg won't be hanging on to his cash. The company said he will use the "substantial majority" of the windfall to cover the whopping tax bill he'll be hit with, thanks to his plan to exercise a large stock-options grant that will substantially increase his ownership stake in the company he founded.

In 2011, Facebook CEO Zuckerberg pulled in a $500,000 base salary. But he requested -- and will receive -- only $1 per year in salary starting January 1, 2013.

Zuckerberg, who remains the largest shareholder in the company he created, still takes home a hefty pay package. His total compensation in 2011 came to $1.48 million, according to Facebook's calculations.

Although he only owns around a quarter of Facebook, Zuckerberg's shares carry extra voting rights. After the IPO, Zuckerberg will control around 57.3% of the voting power in Facebook.

source: http://money.cnn.com/2012/05/03/technology/facebook-ipo-price/index.htm?hpt=hp_t3

Report: Facebook may file for IPO next week

The social-networking behemoth is planning as early as next week to file for an initial public offering worth up to $100 billion, according to The Wall Street Journal, citing unnamed sources.

Morgan Stanley is expected to be lead underwriter with Goldman Sachs also likely to play a major role, the sources said. USA TODAY could not independently corroborate the story. The timing of such a filing could put Facebook on track to start trading stock as early as this spring.

The six-year-old Facebook is expected to raise $10 billion, with a valuation of between $75 billion and $100 billion, although such information would not be in the initial registration document. By either measure, it would make Facebook among the largest IPOs ever. (Visa set a record in 2008, when it raised $17.9 billion.)

"It makes Facebook the largest Internet IPO ever," says Kathleen Smith, a principal at IPO investment advisory firm Renaissance Capital.

Facebook declined to comment. "We're not going to participate in IPO-related speculation," Facebook spokesman Larry Yu said Friday.

Article Source: http://www.usatoday.com/tech/news/story/2012-01-27/facebook-ipo-could-come-next-week/52823968/1