Behind the numbers of Facebook’s IPO filing

Marketplace Contributor May 4, 2012

Jeremy Hobson: First to some numbers we already have regarding Facebook’s plan to go public. The company has officially filed paperwork, setting a target price for the shares it’s going to be offering.

Marketplace New York bureau chief Heidi Moore joins us now live with that story. Good morning.

Heidi Moore: Good morning.

Hobson: So Facebook, I see, could have a valuation — the company as a whole — could have a valuation between about $76 billion and $96 billion. Why does that matter?

Moore: It tells us how much Facebook thinks it’s worth. So it thinks it’s playing in the same big leagues as Amazon, which just hit $100 billion in market cap like a week ago. You know, Amazon’s been in business for 15 years and sells everything on the earth, so Facebook is telling us that social networking is as important as an established business like that.

Hobson: And the share range for an individual stock of Facebook will be between $28 and $35. Why does that matter?

Moore: It tells us who’s going to be interested. Most of those people who get those shares are going to be big institutional investors — even the regular people who get it through their brokers are going to have to be big spenders or people who trade a lot, which means if there’s listeners out there who want Facebook shares, you’re probably not going to get them. It’s going to be tough for the average investor. But one thing Facebook is doing is it’s actually putting their roadshow presentation online. So it wants it to be the IPO of the people.

Hobson: And finally, the big number: Mark Zuckerberg going to be a big-time billionaire after this thing.

Moore: Yes, well a billionaire defered. He can’t sell his shares right after the IPO, for legal reasons and also just for appearances. It wouldn’t look good if he just, you know, became a billionaire and walked to the bank and cashed out all his shares.

Hobson: Marketplace New York bureau chief Heidi Moore, thanks a lot.

Moore: Thank you.

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