Facebook floats at $116bn valuation

Mark Zuckerberg's social networking behemoth is finally publicly trading, and in its opening minutes secured a $116bn valuation.

by Michael Northcott
Last Updated: 19 Aug 2013

It all started on a humble laptop in Mark Zuckerberg’s university dorm room at Harvard, back in 2004. Now, the CEO and dozens of his executives, employees, friends, and the co-founders are worth millions if not billions of dollars. 

Trading began almost half an hour late because the stock exchange, NASDAQ, was ‘experiencing delay’, but once trading began at an initial high of $43 per share, the initial public offering (IPO) became the third largest in American corporate history, securing Zuckerberg a personal fortune of almost $20bn. 

The buzz surrounding this IPO has been growing for weeks. Facebook raised the planned price range of its shares from $28-$35, to $34-$38 ahead of the flotation, and then increased the amount of stock available to buy by 25% to quell demand from hungry investors. But many will be reminded of the phone number valuations of online businesses back in the days of the dotcom boom, and we all know how that ended…

But at the time of writing, the value of a Facebook share didn’t do anything unexpected, holding firm at around $42 in the first hour of trading. Concerns about the long-term future of Facebook have been rife in the media however, with many conjecturing that the share price will plummet if the company can’t squeeze more juice out of its enormous subscriber base. With 901 million users holding a Facebook account, the site has signed up almost 70% of the world’s Internet users.

Investors will be hoping that this massive audience can be harnessed and made to work properly for advertisers, bringing great returns. But Facebook itself has already essentially issued a profit warning, saying that the lack of revenue on mobile so far could harm its profit-making ability. 

For now though, this is all guesswork, and Zuckerberg will be hitting the town tonight to celebrate, as long as he’s got his coding done for the week. Co-founder, shareholder and early CFO Eduardo Saverin - now worth $2bn - wrote on his Facebook status (where else?) to congratulate Zuckerberg today, saying: ‘I especially wanted to congratulate Mark Zuckerberg on keeping tremendous steadfast focus, however hard that was, on making the world a more open and connected place.’ Let's hope the markets agree...

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