Questions about Facebook's IPO

Facebook is going to raise $5B. However, all the aspiring investors will pay a steep excess to the initial share price. So people would be MORE THAN HAPPY to pay twice the initial share price. So why can't Facebook profit on this?

  1. Instead of issuing /shares and 100,000,000 (B in market cap), why can't they issue only 50,000,000 @ 0/shares, and thus sell LESS OF THE COMPANY FOR the same amount of money? This would benefit Mark Zuckerberg twice as much.

If you were selling 50% of your fantastically successful business. Wouldn't you sell it at a steep premium? Say 10X annual revenues, since your goal is to maximize earnings. An auctioneer or a seller who doesn't sell a business for what it's worth has failed, so I don't see why the I-Bankers would sell it so cheaply knowing that this stock will double in price in 10 days.

The only downside is to investors who purchase the richly-priced shares. Their ROR would be 10% over 10 years, and not 17.9% ROR.

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2.7182818284590...
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They will, to the tune of $5B or more.

They arent selling less of the company by having half as many shares with twice the face value.

He is doing just that.

He's selling it for a hell of a lot more than that.

$5B isnt 'so cheaply', its actually more than any other IPO has EVER raised.

Bet it doesnt.

Specially when the stock lists at lower than what they paid for it.

Thats just plain wrong.

Reply to
Rod Speed
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2.7182818284590...
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2.7182818284590...
2.7182818284590... wrote

That mangles the story completely. The bulk of his wealth wont be the shares he flogs in the IPO, its those he retains and what happens to the price of those after the IPO like with Gates and Brin.

Good question.

Thats not how he benefits from the IPO.

Fraid not.

Where are you getting that number from ?

Only in the sense that the IPO was going to happen sometime.

That mangles the real story.

And thats true in the technical sense.

It isnt 'determined', they make a crude guess at what they can raise in the IPO.

That can be WAY out. It was with google.

That wont happen if the stock is worth more after the IPO than they pay for the stock.

It has no real effect on profits. Its a way of raising capital.

Not even possible.

That assumes you can get the same amount for both parcels. Of course you cant.

Reply to
Rod Speed
2.7182818284590... wrote

Operations like google and facebook are nothing like a gas station.

That isnt the basis for the facebook IPO, their earnings.

Its essentially a bet on what the stock price will do, just like it was with google.

While that works for a gas station, it doesnt for an operation like google and facebook at the IPO stage.

They arent with gas stations.

No they arent.

That doesnt happen with a gas station.

Fraid not.

And that is precisely what is happening with the facebook IPO.

It turned out that with the google IPO, they could have flogged the stock for a hell of a lot more than they did flog it for, but its always very difficult to decide what you can ask IPO price wise and not see the price of the stock sag when its first listed and so punish those who chose to buy the stock in the IPO, particularly with something like google and facebook which are both outstandingly more successful in the market than the alternatives and when there is nothing much to compare them with IPO wise.

The prospects for google were very different than facebook and its much easier for a comptitor to move the users of google away to some other operation if it does a better job than it is with something like facebook or ebay which see massive inertia with the current users for various reasons.

Reply to
Rod Speed

Bill Reid wrote

Everyone can see for themselves that you clearly did.

I told you. Read it.

Wrong, as always.

Been here a hell of a lot longer than you have, thanks.

And its usenet.

Everyone can see for themselves that you are lying, again.

Wota stunning line in rational argument you have there.

Because you mangle the real story considerably.

Wrong, as always.

Wota stunning line in rational argument you have there.

Wota stunning line in rational argument you have there.

Corse it is.

You get no say what so ever on that or anything else at all, ever.

Wota stunning line in rational argument you have there.

Wota stunning line in rational argument you have there.

Wota stunning line in rational argument you have there.

And when this juvenile shit is the best you can manage, here goes the chain on the rest of your juvenile shit.

Reply to
Rod Speed

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