Facebook’s public debut coincides with intensifying U.S. market turmoil. About $1 trillion has been erased from American equity values this month after speculation Greece will leave the euro region reversed the biggest first-quarter rally since 1998, according to data compiled by Bloomberg.
Facebook’s bankers, led by Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc., may split about $176 million for managing the IPO after accepting a lower-than-average fee for their work. They’ll get about 1.1 percent of what Facebook raised, said two people with knowledge of the matter, who declined to be identified because the rate is private.
The price gives Facebook a market value about half the size of Google Inc., which is worth more than $200 billion. The search-engine operator’s value has jumped almost ninefold in the eight years since it went public. To hand its public owners the same returns after pricing at the top of its offering range, Facebook would have to be worth about $920 billion by 2020. Apple Inc., the most valuable company in the world, has a market value of about $496 billion.
The offering eclipses the 2004 IPO of Google, one of Facebook’s chief competitors for online advertising. Google raised $1.9 billion in its initial share sale, including an over-allotment option. The shares sold at $85 apiece, giving Google a market value of about $23 billion, or about 10 times sales in the 12 months through June 30, 2004.
Facebook boosted the deal’s size amid a two-week series of meetings where Chief Executive Officer Zuckerberg, Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman pitched the sale to investors across the U.S.
“There’s hundreds of millions of people that want to emotionally buy this stock and most of them are going to have to buy it in the aftermarket,” said Jon Merriman, chief executive officer at investment firm Merriman Holdings Inc. in San Francisco. “I’d like to see it season over a couple of months.”