Facebook Inc aims to raise about $10.6 billion in Silicon Valley's largest IPO, dwarfing the coming-out parties of tech companies like Google Inc and granting the world's largest social network a market value close to Amazon.com's.
The eight-year-old social network that began as Mark Zuckerberg's Harvard dorm room project indicated an initial public offering price range of between $28 and $35 a share on Thursday, which would value the company at $77 billion to $96 billion.
The size of the IPO reflects the company's growth and bullish expectations about its money-making potential as a hub for everything from advertising to commerce.
"We certainly haven't ever seen a tech IPO on this grandiose a scale," said Lise Buyer, a principal with the IPO advisory firm Class V Group.
Buyer, who worked on Google's 2004 IPO, said the question about a company "that's already this big and that is raising this much money is how many of the glory days of growth are in the past versus how many are ahead."
Facebook stands to raise as much as $12 billion at the upper end of its planned range. If an over-allotment or "greenshoe" option is triggered, the company could sweep up a maximum of $13.6 billion, according to a Thursday prospectus.
Facebook is only getting about half, or $5.6 billion, of the estimated $10.6 billion that it would raise at the midpoint of its planned IPO range. About $4.9 billon will go to some existing shareholders.
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Facebook's stock could begin trading as soon as May 18, according to a road showschedule obtained by Reuters. The offering's price range can be adjusted depending on Wall Street's response during the road show.
Investors are expected to flock to the highly anticipated IPO, although there have been growing concerns about the social network's longer-term growth and Zuckerberg's majority control.
Facebook will trade at 13 to 16 times the revenue that GreenCrest Capital analyst Max Wolff believes it will generate this year. By comparison, Google, the world's dominant Internet search engine, currently trades at 5.5 to 6 times expected 2012 revenue, he said.
Google's valuation was higher when it went public in 2004, though Facebook's IPO valuation is still higher than Google's was back then, Wolff noted.
But some observers said the rich premium was unlikely to deter investors.
"People are going to be very comfortable with this valuation," said Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly $200 million. The firm is not selling in the IPO.
"A price range of $28 to $35 will be a relief to some people who are concerned that they may try to take the highest possible price because of high demand," he said.
"The amount being raised is noteworthy. Selling stockholders are raising about $5 billion in the IPO, which is a lot."
Facebook executives are due to hit the road on Monday, presenting their investment case to audiences. They will start in New York, go to other major cities such as Chicago and Boston, and end up on Facebook's home turf in Menlo Park, California, according to the schedule.
Zuckerberg is expected to participate in the two-week road show, a source has said, although Chief Operating Officer Sheryl Sandberg and Finance Chief David Ebersman will lead the briefings.