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FB: Facebook Shares Rise In First Moments Of Trading On Nasdaq

AP  |  Posted: Updated: 05/18/2012 11:43 am

NEW YORK (AP) — Facebook is updating its status to "public company" as its stock jumps in its debut on the Nasdaq Stock Market.

The stock rose to $42.05 on Friday morning. CEO Mark Zuckerberg smiled as rang the opening bell from Facebook's headquarters in Menlo Park, Calif. Surrounded by cheering Facebook employees and wearing his signature hoodie, the 28-year-old pushed the button that signals the opening of the stock market in New York.

On Thursday, Facebook and the investment bankers arranging the IPO settled on a price of $38 per share. The company and its early investors raised $16 billion in the offering, which valued Facebook at $104 billion. That makes Facebook the most valuable U.S. company to ever go public.

Now, the stock market will assign a dollar value to Facebook that will rise and fall with investor whims. It will be subject to broad economic forces as well as how much profit it earns from one quarter to the next. But Facebook is one of the rare companies whose IPO transcends Wall Street's money lust to become a cultural touchstone for the way technology is reshaping our lives. Since its start as a scrappy network for college students, Facebook has come to define social networking by getting 900 million people around the world to share everything from photos of their pets to their deepest thoughts.

It has done so while managing to become one of the few profitable Internet companies to go public recently. It had net income of $205 million in the first three months of 2012, on revenue of $1.06 billion. In all of 2011, it earned $1 billion, up from $606 million a year earlier. That's a far cry from 2007, when it posted a net loss of $138 million and revenue of $153 million. The company makes most of its money from advertising. It also takes a cut from the money people spend on virtual items in Facebook games such as "FarmVille."

Facebook's public debut marks a new milestone in the history of the Internet — and the people who use it. In 1995, Netscape Communications' IPO gave people their first chance to invest in a company whose graphical Web browser made the Internet more engaging and easier to navigate. Its hotly anticipated IPO lit the fuse that ignited the dot-com boom and culminated five years later in a devastating bust that obliterated the notion that the Internet had somehow hatched a new economy where making money no longer matter.

It took Google Inc.'s IPO in 2004 to prove just how profitable a well-run Internet company with a disruptive idea can be. In the process, the Internet search leader is forcing other industries to adapt to a new order where people have come to expect to be able to find just about anything they want by entering a few words into a box on any device with an Internet connection.

Facebook's IPO underscores an Internet evolution that has made the understanding of connections among people as important as Google's massive index of Web links. Now that Facebook will be under greater pressure to sell more advertising to bring in more revenue, this IPO also cast a brighter light on how just how much revealing information that people have been sharing the past few years without fully understanding the implications.

Facebook's IPO almost certainly will enrich other up-and-coming entrepreneurs as Zuckerberg uses the company's trove of cash and stock to buy other startups in an effort to being in other talented engineers and promising technology. That's what has been doing for years. Since it went public in 2004, Google has spent $10.2 billion buying nearly 200 other companies. Those figures don't include Google's still-pending $12.5 billion acquisition of cellphone maker Motorola Mobility Holdings Inc., which is still awaiting regulatory approval in China.

Zuckerberg's biggest deal came so far when he agreed to buy Instagram, a maker of a popular mobile app for photos, for $1 billion. Because most of the deal is being paid for in stock, Instagram is already getting richer. Based on Facebook's IPO price of $38 per share, Instagram is in line to receive nearly $1.2 billion.

Though Zuckerberg rang the Nasdaq opening bell from California, people outside the stock market in Times Square snapped photos of a big blue Facebook sign that lit up the building. Some of them used their smart phones to checked in to the Nasdaq on Facebook. Frederick Nolde, who was visiting from Richmond, Va., said he bought 100 shares through the online brokerage eTrade.

He thinks the company is worth $100 billion. "I think Google is a good comparison and it's worth $200 to 300 billion. The real question is how they do in mobile. if they can figure that out they'll do well."

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AP Technology Writer Michael Liedtke in San Francisco and Joe Pisani in New York contributed to this story.

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Take a look at the slideshow (below) to see how Facebook's IPO compares to the biggest tech IPOs of the past decade.
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  • Google: $1.67 Billion

    Google <a href="http://www.nytimes.com/2004/08/19/business/weak-demand-leads-google-to-lower-its-sights.html?pagewanted=all&src=pm" target="_hplink">raised $1.67 billion</a> in its August 2004 IPO, valuing the company at $23 billion. As of May 15, 2012, Google <a href="http://www.dailyfinance.com/quote/nasdaq/google/goog" target="_hplink">was worth $199.2 billion</a>.

  • Yandex: $1.3 Billion

    The Russian search engine and web company <a href="http://www.huffingtonpost.com/2011/05/24/yandex-ipo-russia-search-engine-linkedin_n_866226.html" target="_hplink">raised $1.3 billion went it went public</a> in May 2011, giving it a valuation of around $8 billion. As of May 15, 2012, it had <a href="http://www.dailyfinance.com/quote/nasdaq/yandex-nv/yndx" target="_hplink">a market capitalization of $37.5 billion</a>.

  • Shanda Games Ltd.: $1.04 Billion

    Shanda Games, a Chinese online gaming company, raised $1.04 billion when it went public in Sept. 2009. That month, it had a market capitalization of $976.95 million, <a href="http://ycharts.com/companies/GAME/price#series=type:company,id:GAME,calc:price,,id:GAME,type:company,calc:market_cap&zoom=&startDate=9/25/2009&endDate=11/30/2011&format=real&recessions=false" target="_hplink">according to data from YCharts</a>. As of May 15, 2012, the company <a href="http://www.dailyfinance.com/quote/nasdaq/shanda-games-limited/game" target="_hplink">had a market capitalization of $1.3 billion</a>.

  • Zynga: $1 Billion

    Social gaming company Zynga raised $1 billion in its IPO in December, 2011, then the biggest web-related IPO since Google, <a href="http://www.huffingtonpost.com/2011/12/16/znga-ipo-nasdaq_n_1153518.html?ref=technology" target="_hplink">according to the Associated Press</a>. Zynga had a valuation of $7 billion before it began trading on the Nasdaq on December 16. As of May 15, 2012, the company <a href="https://www.google.com/finance?client=ob&q=NASDAQ:ZNGA" target="_hplink">had a market capitalization of $6.31 billion</a>.

  • Giant Interactive Group Inc.: $887 million

    Giant Interactive Group, a Chinese online gaming company, raised $887 million when it went public in October 2007. In December of that year, the company had a market capitalization of $3.358 billion, <a href="http://ycharts.com/companies/GA/price#series=type:company,id:GA,calc:price,,id:GA,type:company,calc:market_cap&zoom=10&startDate=&endDate=&format=real&recessions=false" target="_hplink">according to data from YCharts</a>. As of May 15, 2012, the company <a href="http://www.dailyfinance.com/quote/nyse/giant-interactive-group/ga" target="_hplink">was valued at $1.2 billion</a>.

  • RenRen: $743 Million

    RenRen, the Chinese social networking site, raised $743 million in its IPO in May 2011, <a href="http://www.reuters.com/article/2011/05/04/us-renren-ipo-idUSTRE7433HI20110504" target="_hplink">according to Reuters</a>. At the end of its first day of trading, the company had a market value of $7.4 billion. As of May 15, 2012, RenRen's <a href="http://finance.yahoo.com/q?s=RENN" target="_hplink">market capitalization stood at $2.3 billion</a>.

  • Groupon: $700 Million

    The daily deals site <a href="http://www.huffingtonpost.com/2011/11/04/groupon-ipo-biggest-since-google_n_1075374.html" target="_hplink">raised $700 million in its IPO</a> in November 2011, valuing the company at nearly $13 billion. As of May 15, 2012, Groupon's value was $7.85 billion.

  • Vonage: $531 million

    Vonage, the VoIP company, <a href="http://www.cnbc.com/id/46209095/The_10_Biggest_Internet_IPOs?slide=6" target="_hplink">raised $531 million when it went public</a> in May 2006, CNBC reports. The next month, it had a market capitalization of $1.338 billion, <a href="http://ycharts.com/companies/VG/price#series=type:company,id:VG,calc:price,,id:VG,type:company,calc:market_cap&zoom=&startDate=5/24/2006&endDate=5/16/2012&format=real&recessions=false" target="_hplink">according to data from YCharts</a>. As of May 16, 2012, Vonage <a href="http://www.dailyfinance.com/quote/nyse/vonage-holdings-corp/vg" target="_hplink">had a value of $387.1 million</a>.

  • Orbitz Worldwide Inc.: $510 Million

    Orbitz, the online travel company, raised $510 million when it went public in July 2007. As of May 15, 2012, the company <a href="https://www.google.com/finance?client=ob&q=NYSE:OWW" target="_hplink">had a market capitalization of $393.05 million</a>.

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