Facebook Offers More Shares in Stock Debut
Voice of America, Wednesday, May 16th, 2012
Social media giant Facebook says it is boosting the number of shares of company stock it will offer for sale to the public later this week, due to strong investor interest.
Facebook said Wednesday it will now offer 421 million shares for sale — a 25 percent increase. The privately owned social network Internet site will become a public company on Friday with a stock sale that analysts say could raise $16 billion for the company.
That would make the Facebook stock debut one of the largest in U.S. financial market history, perhaps trailing only the nearly $18 billion raised by the Visa credit card company in 2008.
Facebook plans to set the price for its stock on Thursday, but says it will cost between $34 and $38 a share.
While large institutional investors appear anxious to buy Facebook stock and become part-owners of the company, not everyone is convinced that investing in the company will prove worthwhile. One recent survey of Americans showed half of those polled thought Facebook would prove to be a passing fad, even though it now has has 900 million users worldwide.
Then on Tuesday, the world's largest carmaker, U.S.-based General Motors, said it is ending its $10 million advertising account on Facebook after concluding that its promotions on the site had little effect in boosting sales.
The loss of paid advertising from GM will have little affect on the Internet giant, which earned $3.7 billion in revenues last year. But financial analysts say this could lead other businesses to reconsider using Facebook as part of their overall advertising strategy. Facebook's advertising revenue growth has slowed in recent months, and it has yet to devise a strategy to attract advertising on mobile devices like smartphones or tablet computers.
Facebook's value is expected to increase to more than $100 billion when it begins trading on the Nasdaq exchange.
TruthNews. All Rights Reserved.