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IN A FEW short weeks Facebook looks set to make history for the umpteenth time in its brief history.
The social network behemoth is not even ten years old but later this month it will float on the stock market for the first time – and speculation is high that it will become one of the most valuable companies in the world.
Over 337 million shares will be up for grabs when Facebook makes its initial public offering (IPO – the first time a private company sells stock to the public), in what the Financial Times has called ‘the most hotly anticipated share sale since Google’ in 2004.
Other internet companies have done well when they went public – most notably Google and LinkedIn – but Facebook is being seen as a test case for social media sites. There has been speculation simmering lately of another tech bubble, fuelled in part by Facebook buying Instagram for $1 billion last month, and the reaction to Facebook on the stock market is seen as an indicator of whether the market sees social networking sites as worth investing in.
The figures involved in the floation are huge. Last week Facebook estimated that the company could be valued at between $77 billion and $95 billion (€58 billion and €72 billion). In comparison, when Google floated in 2004 it had a valuation of $23 billion.
To put this slightly into perspective: Facebook is very likely to be worth more than the €85 billion bailout that Ireland received from the troika in 2010.
Facebook has put together this video featuring an unblinking Mark Zuckerberg which will be shown to potential investor firms this week. Much of the information is already known, but it also includes some key facts and figures about how big the social network is. Currently it has:
“It’s likely to be the biggest technology IPO ever,” says Gareth McCluskey, a portfolio manager at Davy. “It’s the first of the social media companies to float so there’s huge publicity around it and it will do well initially”.
Facebook, which will be listed on the Nasdaq, is expected to have a market value close to that of Amazon or Cisco Systems.
(AP Photo/Paul Sakuma)
All the signs are that there will be a huge take-up of shares in the company. Anticipation is high, and the Financial Times has suggested that Facebook will ‘pop’ on its first day – that the price will surge as people who don’t often buy shares rush to get a part of it (a bit like with Eircom in the 1990s but probably without the disastrous fallout afterwards).
There is precedent for that: Google led the way in major internet companies floating on the stock market in 2004 and has done increasingly well since then. LinkedIn has also done surprisingly well since floating last year; its starting share price was $45 per share in May 2011. By the end of its first day, the share price had risen by 109 per cent to $94.25, and it is currently trading at $106 a share (around €80).
There have been some warning signs with internet companies on the stock market, however. Deals website Groupon’s share price closed at a record low last Friday, at just $9.97 a share, down from a high of $26 per share, amid uncertainty over its financial model.
“There’s a lot of social media companies looking to float but it will depend on how Facebook goes,” says Gareth McCluskey of Davy. “This is going to be a real benchmark”.
(Photo: AP Photo/Richard Drew)
Short answer: yes.
Buying shares is relatively straightforward. “It’s very similar to opening a bank account,” says Gareth McCluskey.
For anyone who has never bought shares before, it requires setting up an account with a stockbroker. Usually this will involve giving your name, address, and other details, providing proof of ID and also proof of address. Some stockbrokers may charge to set up an account and the whole process can take a day or two.
Shares in Facebook are expected to cost between $28 and $35 per share (around €21 to €26). Technically you could buy just one share, but with commission and other costs involved it wouldn’t exactly be worth your while.
The good news: Facebook is going to be floated on the Nasdaq, which means the share price will be listed in dollars. Given the current exchange rate, this is good news for anyone buying shares from this side of the Atlantic.
The slightly less good news: A lot of the shares are going to be offered to the biggest clients of the giant Wall Street banks that oversee the stock sale – in other words, big investment firms will be prioritised over people who dabble in the stock market as Facebook aims to sell shares by the millions, rather than by the hundreds or thousands.
The New York Times has sounded a note of caution, noting:
The frenzy surrounding the Facebook public offering is reminiscent of the dot-com boom of the late 1990s, when investors clamored to get a piece of the next hot Internet company.
The exact date for when Facebook’s IPO will happen hasn’t been announced yet but the Wall Street Journal has reported that it is likely to be 18 May. Mark your calendars – it looks set to be a major day for the world’s biggest social network.
Note: The information in this article is intended as a guideline and should not be used as an authoritative source on any financial decision.
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Of course it was an Irish budget; it took much from those that need most, and took nothing from those that have most.
Just one example…three rows of social houses across the street from me…car or two in front of each of them…trips to the post office every week…work?…what for?…we have everything for free…i hope i will see them soon leaving home in the morning to go and work hard, just like me!
Good man. There are jobs out there.temporary maybe. Interns maybe. Free college or fas courses maybe. But defo no excuse to be at home all day
Agree wholeheartedly with the Senator – the budget reflects profound ideological choices about the kind of Ireland we want.
Neither party has outlined any kind of vision beyond balancing the books – this is a massive failing.
I think it was a very good budget.. Its not going to impact much on those who are working. There are currently 10,000 jobs advertised in ireland… So jobs there are, i think the budget was a push to get people back to work.
Alex. When I see the “back to work” slogan used regarding this budget it makes me laugh. Very few employers in their right mind will employ anyone unless absolutely necessary with this proposal for them to pay first 4 weeks of sick pay.
What are we paying PRSI for again? Oh yeah, for when we’re all on the dole!
And even if the 10,000 jobs figure is correct (where are you getting that from, btw?), there are well over 300,000 people unemployed in this country at the moment. And what about the 140 companies that went under in the past month?
“Incentivising” people to go take jobs that aren’t there, by placing them
In danger of poverty, pushing them deeper into poverty. Weak justification, given the circumstances.
Well I think was a good budget. There are politics to how the decisions can be made and they did their best. But they should have put a few euro on the fags. That way unemployed people won’t smoke away their social welfare. And don’t tell me unemployed strapped for cash people should have the freedom to smoke blah blah
Have you something against the Unemployed then Aidan ?
That’s all very well and good, but you are actually speaking about an addiction. And forcing them to quit is infringing on their rights, whether it’s a silly decision to smoke or not.
If a person on the dole had a worse addiction like heroin we wouldn want them to spend their dole on it and smoking is no different.. I dont mind paying tax for the needy or for education and healthcare but you can get fucked if you think im paying for someone to smoke 20 a day and live in the local bookies.. Tax the shite out of bad habits I say…
@yosser. I have something against the unemployed smoking my tax money. As stated. Now please stop with your amazingly silly point
Aidan. You’d never look in the mirror for me and tell the cranky man to stop making his amazingly silly points.
Can they smoke their own tax money? I’m pretty sure the 14% out of work haven’t always been on the dole.
Yeah lads great being on the dole money for nothing ….Working 5 days a week on the black market couldn’t beat it !! You just keep on paying your taxes good lads ….
Unemployed because they chose it as their lifestyle?…YES…because they are too lazy?…f..k YES! They feel far too comfortable with the dole coming to their pockets every week and don’t even think about doing anything towards finding a job. Not all of them of course, but surely a lot of them.
Es war sicherlich ein irischer budget!!
enjoy! :)
Bitterly disappointed to hear Dr Zappone on with Ivan Yates during the week. Dr Zappone talked about how great the Seanad was but guys like me (taxpayers) have no say because I went to the “wrong” university. Another taxpayer (a friend who happens to own and run a shop, and is doing so very successfully during a recession) who pays a lot more tax than I do gets zero say because he didn’t go to college. Another friend, a supremely intelligent guy doesn’t get a vote because he got his degree (a First Class Honours) at Baliol, Oxfod. It is a bit rich cribbing and moaning about inclusiveness when you are happy to partake in the most obscenely undemocratic instituion imaginable.
Huge respect for gay rights work, but the fact that Dr Zappone went out of her way to say how great the Seanad was makes my blood boil.
Dump the euro
Balance the books
Problem sorted
Ooops! One small problem. The public sector might have to take a pay cut. I guess we will just have to make our children pay instead. Simples.
@Rommel the country is in debt. If you can find their own tax money you are some man. Otherwise cop on
@Aidan
Can civil and public servants smoke? After all you’re paying their wages too. Or are they exempt because they contribute tax? The majority of the unemployed have contributed plenty over the years too you know. Why not hammer drink in the budget too?
@Rommel public and civil service can do what they want with their disposable income. Don’t be so silly. Look, ill spell it out for you like a kids story it might help you: So if you were unemployed, you’re sitting with your partner scratching your head over how you are going to financially cope, and her and your feet are sore from walking through Dublin at the anti budget protest and she turns to you and says ‘Rommel, please give up the fags for a start, that will help, there is too much money being smoked. You smoke twenty a day. That’d sixty a week, a third of your job seekers allowance ‘ ‘why no honey, it’s my right to smoke, I’ll smoke if I want, I’ve worked long enough over the years so I’ll do what I want, so goodnight’
End of
“public and civil service can do what they want with their disposable income”, but not the unemployed? Why not? I got news for you, it’s none of your business.
End of.
@Rommel buddy surely you know that disposable income is that of money left after tax. Unemployed receive allowance, support. Incomparable in my opinion. Anyway have a good Friday night. I’m headin out for a fag
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