Facebook IPO Aims for Record Deal

We already knew the Facebook IPO was going to be big. Now we know how big – or at least how big Mark Zuckerberg and company want it to be.

The social network giant announced today that it is targeting a $96 billion deal in its much-anticipated initial public offering on May 18. If it succeeds, that would be the richest debut ever for a U.S. stock.

Facebook’s goal is ambitious, to say the least. For starters, a $96 billion valuation would be 96 times the $1 billion in earnings the company reported in 2011. It would also more than quadruple the $23 billion valuation Google (Nasdaq: GOOG) achieved in its 2004 IPO – the gold standard of tech IPOs.

In fact, a $96 billion valuation out of the gates would be 60% higher than the current record of $60.2 billion, established by UPS (NYSE: UPS) in 1999. And Facebook is only eight years old. The United Parcel Service had been in existence for 92 years when it went public.

To get to a $96 billion market cap, the Facebook IPO is expected to sell 337 million shares at a price between $28 and $35 a share. If the stock prices at the low end of that range, Facebook’s initial valuation would “only” be $77 billion – still a record and still 77 times earnings.

If Facebook raises the $13.6 billion analysts are expecting from its IPO, that would trail only Visa (NYSE: V) and General Motors (NYSE: GM) for the most money raised in a U.S. IPO.

So it’s safe to say the Facebook IPO is in a league of its own. 

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