The NYSE beats out NASDAQ for Facebook
PrivCo, a New York firm and ‘The Private Company Financial Data Authority’ that tracks private companies, believes that Facebook plans to file IPO documents as early as late Tuesday (1/31) or early Wednesday (2/1). This makes total sense and explains why secondary trading in Facebook shares was halted or frozen this past week. There are several interesting aspects behind this IPO.
It looks like Facebook will be launching on the New York Stock Exchange instead of the tech heavy NASDAQ as was expected. The ticker symbol is expected to be “FB,” according to PrivCo, which also cites its own private sources. Considering that recent IPO’s (Zynga, Groupon, LinkedIn etc) debuted on the NASDAQ makes one ponder on why the change. I am sure that question will be answered in the not to distant future.
Goldman Sachs plays second fiddle
In another twist, the PrivCo report also confirms details first reported by the Wall Street Journal that the Menlo Park company, has chosen Morgan Stanley as the lead underwriter, with Goldman Sachs as co-lead. Sources suggest there are two reasons for this;
- For the past year, Morgan Stanley has had the strongest track record in the consumer internet IPO space.
- Leveraging the hundreds of thousands of retail investor accounts which is something Goldman lacks.
The second reason I don’t quite follow, unless during the always important roadshow the retail investor is going to get a piece of the action. Considering the fact that Facebook has 2.35 billion shares (fully diluted) in this case it’s actually quite possible. If the company floats 10% of those shares, underwriters would need to place 235 million shares. The question then remains is whether or not this would be a wise investment for the retail investor.
Share pricing and valuations
Initial pricing talks are in the $38 to $40 per share range. Based on those numbers, Facebook would raise almost $10 billion dollars and give the company a valuation of $90 – $95 billion. The offering will certainly place the IPO in the top five, historically. There is an outside chance that Facebook may even take the top spot, dropping Google to the number 2 position.
There are a few reasons why now is a prudent time to IPO. The first one is that the markets, for a few months now, have somewhat stabilized and have been trending higher. The second is that there is a growing pressure to place the IPO sooner than later based on the possibility of having to report accounting numbers before June.
Regardless, there are going to be several millionaires made on this one and certainly at least one billionaire. Some of those millionaires will be those that work in the trenches for the company. It will be interesting over time to see how synergies mesh when the millionaires meet around the water coolers. Also the Venture Capitalists (earlier the better) may profit as much as 1000%. I’ll have a complete report on that one out next week.
Stay with us at Daily Deal Media – the water is definitely heating up.