Investors are readying themselves for Facebook’s IPO and the social network’s debut on Wall Street. Facebook, which is right now valued at $104 billion, is bigger than well established corporations such as Starbucks Corp and Hewlett Packard. Facebook’s worth is also more than the worth of Starbucks and HP combined. With such a high valuation, investors are speculating intensely about how things will go once the company starts trading.
According to a finance professor who teaches at University of Notre Dame, a 15 to 20 percent increase is a possibility. Facebook’s worth will increase after the Initial Public Offering is through and Tim spoke in regard to the company’s value after the IPO concludes.
Earlier this week, Facebook also increased the range of its shares up. It was reported that the company’s shares are going to trade between $34-38. Facebook increased its share range between high demand for its stock. However on Thursday, as opposed to the general consensus of Facebook pricing it shares at $36 per share, the company price its shares at $38. However, according to some analysts, the price per share may increase even further once the company starts trading at the Nasdaq index.
The Initial Public Offering of Facebook has been the center of attention since a very long time and the time is finally here. Some analysts believe that there might be a rise of 30 percent in Facebook’s share price once the company starts trading on 11 am eastern time. Moreover, an average analyst of Morningstar has estimated the closing price per share of the company to be $50 per share.
If Facebook’s shares trade at $38 per share, the company will trade more than 100 times the historic earnings against tech giant Apple’s 14 times and search engine giant, Google’s 19 times.
However, despite the IPO and between all the hype, Facebook still faces challenges in sustaining its momentum of growth.