David Brancaccio: The social media company Facebook is expected to sell its stock publicly sometime this month and would likely be valued by the stock market something like $100 billion. The Wall Street Journal reports today that next week the company will start trying to win over investors privately — and could start officially selling stock on May 18th.
Joining us live now is Marketplace’s New York bureau chief Heidi Moore. Hello Heidi.
Heidi Moore: Hi David.
Brancaccio: So, the strong suggestion is that Facebook will go public later this month. What happens until then?
Moore: Starting today, or this week, the company will go on what Wall Street calls a roadshow, which sounds exactly like it is — it’s like a concert tour; like “This is Spinal Tap” for finance. So all the executives are going to meet with investors all across the country, and tell them how great Facebook is and why they should buy the shares.
So these road shows can be really fun affairs. When Kraft went public earlier this decade, they gave out baskets of Oreos and macaroni and cheese. But Facebook isn’t going that route; they’re going cut-rate. So Mark Zuckerberg, the CEO, isn’t even going to be there. And I don’t think investors are going to like that, because they’re putting millions in the company — they want to see the guy who’s running the show.
Brancaccio: Probably trying to save just a little bit of money there, because they don’t have a lot of cash rattling around… So perhaps, then, the Facebook offering might disappoint? Are there concerns?
Moore: Yeah, not so much. It’s an incredibly popular deal; there are shares everywhere; everyone’s clamoring to for them. Yes, the company has slow ad revenue; yes, they paid $1 billion for Instagram. But, the power dynamic in this deal has changed a lot — everybody already knows what Facebook is about.
I talked to Jason Raznick; he’s editor of Benzinga.com, a stock investment site. Here’s how he described it:
Jason Raznick: This is definitely a different kind of roadshow. It’s kind of like you have to go through the motions, but they’re almost not there pitching it because everyone already knows the pitch.
Right, everyone knows what Facebook’s about. So the company is apparently going to go public May 18th — stay tuned, it should be big.
Brancaccio: Marketplace’s Heidi Moore in New York, thank you very much.
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