Facebook has broken records for its company valuation, as it makes its debut on the stock market. The social networking site priced its shares at $38 each, which is at the high end of expectations, and gives it a total value of $104 billion (about £66bn).
As Reuters points out, that valuation makes Facebook worth more than Starbucks and Hewlett-Packard combined.
According to The Telegraph, that is “more than any other US company has been worth on the day of its market debut.” The process will also see it raise about $16bn – after trading begins on the Nasdaq – which makes it the second biggest IPO (initial public offering) after Visa.
Anyone with a stake in Facebook will be watching very carefully once trading starts in New York on 18 May at 11am (4pm GMT). Some Wall Street analysts suggest that the share price could then go up by 15 to 20 per cent or even as much as 30 per cent.
However, a number of the company’s early investors have reportedly decided to sell more shares than they had originally committed to, which could be seen as a sign that a few of its biggest backers are unsure about the value of the business in the long term.
One of the major concerns is that although Facebook is managing to turn a profit, it’s not at the level expected of a company with such a huge valuation.
Despite having a user base of 900 million people and more than 500 million “active” users, Facebook has yet to find the best way to turn this asset into money. On top of that, users are increasingly accessing Facebook on smartphone apps, where there is less screen space to sell to potential advertisers. One of Facebook’s new ideas is its own App Center.