Facebook to Dwarf Google's IPO?

Joel Anderson |

MS, GS, JPM, BCS, BAC, OR, GOOG, BRK.A, Mark Zuckerberg, Warren Buffett, Vladimir Lisin, Liliane Bettencourt, Facebook, IPO, Facebook IPO, Preview, valuation, fees The Christmas morning of tech IPOs could be just around the corner as Facebook is reportedly planning to file for an initial public offering on Wednesday. Months of swirling rumors appear to finally coming to a head, so here's a quick look about what will be, based on the hype surrounding it, the biggest event to occur in the history of the stock market.

Facebook Overshadows Google's IPO?

The Facebook IPO appears poised to be the biggest tech IPO in history as it raises an expected $10 billion (Facebook is expected to file to raise $5 billion, but this is widely believed to be a low-ball offer that will increase before the IPO). This would be more than six times the $1.66 billion that Google (GOOG) raised in its 2004 IPO. Google, though, was worth only $23 billion after that first day, while Facebook is believed to be valued at between $75 and $100 billion. It would make Facebook the 15th largest IPO in history (6th largest American IPO), and the second most valuable website in the world ahead of Amazon (AMZN) and trailing Google.

Slew of New Millionaires to Friend on Facebook

Current Facebook employees and investors who hold shares in the company could be in for a massive payday. Founder Mark Zuckerberg, for instance, is expected to be worth $24 billion. At age 27. This would mean that Zuckerberg would be worth approximately half of what Berkshire Hathaway's (BRK.A) Warren Buffett is worth (though at less than one-third of his age), and would land Zuckerberg at number 15 on the Forbes list of world billionaires, just behind Russian Steel magnate Vladimir Lisin and ahead of the heir to the L'Oreal (OR.PA) fortune Liliane Bettencourt.

The good fortune won't stop with Zuckerberg, though. The IPO is believed to be poised to create over one thousand new millionaires from Facebook employees and shareholders.

And the Markets?

Another subplot to the story of Facebook's IPO is that it represents a red letter day for Morgan Stanley (MS), the company reportedly selected as the lead underwriter for the IPO. This means a truckload of fees, which could top $500 million for the whole deal, for Morgan Stanley, but also real prestige in beating out other major firms. While Goldman Sachs (GS), JP Morgan (JPM), Barclays (BCS), and Bank of America (BAC) will also be working on the deal, Morgan Stanley appears ready to take home the biggest slice of the pie.

There's also the question of whether or not Facebook warrants the sky-high valuation many are projecting. Many analysts point out that the company would need to continue growing at astronomical rates to warrant a market cap as high as is expected and question whether or not it's possible. Earlier this week, Jim Rogers said Facebook is not a stock he'd buy. Others, though, clearly seem to believe that the company's business model and massive user base warrant the level of excitement being generated. Only time will tell, but it's worth noting that the idea that Facebook might ultimately reach 800 million users would have been an anathema eight years ago.

Facebook's Ticker...

Facebook intends to trade under the symbol "FB". Write that one down folks, it's probably gonna come up again a few times.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
BAC Bank of America Corporation 16.72 -0.05 -0.30 49,350,278
BCS Barclays PLC 8.90 -0.02 -0.22 3,490,977
GOOG Alphabet Inc. 807.67 -5.44 -0.67 1,576,404
GS The Goldman Sachs Group Inc. 175.55 0.43 0.25 2,423,299
JPM JP Morgan Chase 68.80 -0.07 -0.10 9,945,050
LPNT LifePoint Health Inc. 60.95 -0.80 -1.30 372,453
MS Morgan Stanley 33.35 -0.03 -0.09 7,912,666


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