Facebook has priced its initial public offering at $38 per share, making it the third-largest IPO in U.S. history.
At that price, the IPO would value the social networking giant at $104.2 billion and make the offering worth $16.08 billion, behind only Visa and power company Enel by size of the offering. Facebook is also the largest venture-backed IPO on record, according to Dow Jones. For comparison, Google's IPO in 2004 was $1.67 billion and Google had a valuation of $26.4 billion.
Facebook priced at the top of its $34 to $38 per share range, showing the strong investor demand for the stock. This week Facebook raised the price range of the offering from a range of $28 to $35. Then the company increased the size of the offering from selling shareholders. The Menlo Park, Calif. company is selling 421 million shares, 180 million from the company and 241 million from selling stockholders.
Bankers on the deal include Morgan Stanley, J.P. Morgan, Goldman Sachs, BofA Merrill Lynch, Barclays, Allen & Co, Citigroup, Credit Suisse and Deutsche Bank.
The company, started in Mark Zuckerberg's dorm room at Harvard University, has grown into a global phenomenon. Facebook now has 901 million monthly active users and is still growing. Facebook generated $3.7 billion in revenue in 2011, up 88% year-over-year from $1.97 billion, and net income was $1.0 billion, up 65% year-over-year from $606 million. First quarter 2012 revenue was $1.058 billion, up 45% year over year from $731 million. Net income however was down, at $205 million, from $233 million in the year-ago period.
For consumers, Facebook has changed the way people communicate and interact online and through mobile devices. For many brands, Facebook has meant a massive change in how they communicate with their consumers in a more open, faster and interactive way. A whole ecosystem of startups including names such as Buddy Media, Hearsay Social, Wildfire Interactive, Vitrue and Lithium, has sprung up to help companies manage this new interaction.
For startups and application developers, Facebook has meant a whole new distribution channel. Facebook remains the largest source of social media traffic for many startups and for some, Facebook is the largest source of non-paid traffic. For social gaming companies like Zynga, now itself worth billions, they were built on Facebook's platform, growing to millions of users via Facebook's viral channels.
Venture capital firms that have won big after investing in Facebook include Accel Partners, Greylock Partners, Meritech Capital Partners and Founders Fund. Other later investors include Digital Sky Technologies, Tiger Global, Elevation Partners and Kleiner Perkins Caufield & Byers.
What's Zuckerberg's net worth after the IPO? About $16.9 billion, not including 60 million unexercised Facebook stock options, according to my colleague Ryan Mac. A number of other billionaires such as Reid Hoffman, Mark Pincus, Peter Thiel and Jim Breyer are also selling shares in the IPO.
Facebook is expected to begin trading on the Nasdaq tomorrow with the ticker "FB." The question now is what price the stock will open at.