The free website people use to chat with their friends and share cool videos of cats sneezing will be worth $US104 billion, more than any other US company has been worth on the day of its market debut.
Mark Zuckerberg has done it. A concept he created in a college dorm has in just eight years become the most desirable company in the world.
The 421 million shares that will be traded on Wall Street at $US38 a pop makes Facebook's public offering the third largest in the US, behind Visa and General Motors.
Facebook raised $16 billion yesterday on the back of feverish speculation and it's expected that excitement around the offering will drive shares higher, possibly to twice their initial value.
Punters have their say
UK bookmakers at Spreadex are speculating that shares could increase to $56 a share after the first day.
When Google first launched its IPO, it raised $1.67 billion and gave it a market capitalisation of $23 billion.
Facebook’s IPO is roughly six times bigger than Google’s IPO, and slightly more than twice Apple’s 1998 IPO, where it launched shares for $22 each.
Today Apple’s shares are selling for $531.85 a pop, which means the sky is really the limit for the social network.
Zuckerberg's personal fortune will sky-rocket to $28.2 billion. Minimum.
Others expected to reap the benefits are:
Co-founder and Napster inventor, Sean Parker, who is expected to make at least $4 billion overnight. Zuckerberg’s former room mate and Facebook co-founder, Dustin Moskovitz, who left the company in 2008 will be worth $7.6 billion. And Facebook’s very first investor, former PayPal co-founder, Peter Thiel, is also expected to benefit to the tune of $4 billion.
Even Zuckerberg’s nemeses, the Winklevoss twins, are set to make a small fortune from the IPO. Around $300 million, in fact.
At least one Silicon Valley great believes Facebook is the way of the future. Apple co-founder, Steve Wozniak, told Bloomberg in an interview that he would be investing in Facebook regardless of the cost.
Woz isn’t the only celebrity set to reap in some decent green tonight. Bono, who owns a 2.4 per cent share in Facebook is expected to become the world’s wealthiest rock star tonight, raking in a $1.5 billion share in Facebook, surpassing Paul McCartney. Looks like it’s going to be a hard day’s night for the former Beatle.
See who's making how much from the IPO with our special interactive below, then keep reading to explore the Insider Network. (Interactive will not appear on some mobile devices).
Story continues after the drop.
But is a procrastination website really worth more than $100 billion? The decision to float the business publicly hasn’t come without criticism. Its growth has stalled, in terms of new users, it hasn’t mastered mobile advertising and it is plagued by privacy concerns.
Despite this, the site’s nearly one billion active users will be more than enough to ensure the company’s success. At least for now. Facebook accounts for 40 per cent of the global internet population.
Analysts say that while issues of privacy and lack of clarity for advertisers will continue to be a problem, Facebook's investment in payment platforms, gaming, music and video mean it's on the right track.
So what happens next?
Well, cracking China, its 1.3 billion inhabitants, and the 160 million people that use its leading social network, known as “Ren Ren”, is essential. China's ruling authorities have blocked Facebook but Zuckerberg, who is currently learning Mandarin teams up with an ISP, he could find a way in.
Facebook also needs to master advertising. A recent study has shown that less than half of Facebook’s users actually click on their ads.
It’s not known exactly how much Facebook has earned from the advertising on the site, and partner apps. An informal survey on Facebook and Twitter showed minimal user interaction with Facebook ads. Less than three per cent of people surveyed said they “regularly” click on the ads, and only 10 per cent said “often”.
The study confirms General Motors’ claim that Facebook advertising doesn’t work. Yesterday GM pulled its ads for the site, claiming they didn’t make a difference.
CEO of social media startup Gigya, Patrick Salyer, predicted that Facebook would launch a search service, just to stick the knife in to Google a wee bit deeper than it already has.
“In my opinion (Facebook) will be ultra focused on revenue in a way they haven’t been,” Mr Salyer told Forbes. “ To differentiate from Google, the Open Graph (Facebook’s third party developer platform) will be key.”
Social networks past: A cautionary tale
Success is by no means guaranteed for Facebook. In fact many experts are warning the company against following in the footsteps of past start ups.
With the exception of Google, few companies have “made it” after launching a public offering. Of the top 10 internet IPOs, nine have seen significant share price decreases, CNET reported.
Losing talent to competitive companies is a big issue, facing Facebook, which is expected to churn out more than 1000 millionaires overnight.
Google lost nearly a third of its 500 employees within four years of its first IPO in 2004 – the largest web offering of the time. And even more employees who became instant millionaires with the company have left with bloated bank accounts.
Facebook, to its credit stopped offering so many shares to employees after it handed out more than 100,000 restricted shares to employees in lieu of a high-paying salary.
Government rains on Facebook's parade
But with less than 24 hours to go, drama is already undermining Facebook’s public offering.
Three US congressman are trying to prevent Facebook co-founder Eduardo Saverin from re-entering the US after he renounced his citizenship and moved to Singapore last year, and charge him heavy taxes, by passing an “ex-Patriot” act which they are pushing president Obama to sign.
Saverin has denied the accusations claiming he would happily pay “hundreds of millions of dollars in taxes to the US.”
Meanwhile, Facebook co-founders will obviously benefit from the offering, but that means you are now a more valuable customer, and product than ever.
Start-up analytics company, Disconnect, has built a tool that lets you calculate exactly how much you are worth to Faceboook, based on how much you post and the quality of your updates and links.
Is this the start of an online backlash? Does this mean users are going to expect to get paid to use Facebook? It doesn’t matter how inflated your sense of entitlement is, if you want a share in Facebook you’re going to have to buy your way in.
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