Betting on a bubble over rise in Facebook shares

Facebook today faces the prospect of a share price “bubble” with spread betters predicting gains of more than 40 per cent on the opening day of trading.

Despite concerns that the social networking phenomenon may be close to peaking with a slowdown in growth in some regions, investors are likely to see hefty returns as shares begin changing hands in New York.

Facebook founder Mark Zuckerberg and key backers, including U2 frontman Bono and his private equity company, stand to add tens of millions to their respective fortunes – on paper, at least.

According to spread betting firm Spreadex, shares could close above $56, providing gains in excess of 40 per cent on the day. It notes, however, that the stock could suffer a pull-back in the weeks following the float.

Previous initial public offerings (IPOs) in the technology sector saw LinkedIn shares close their first day up 109 per cent, while Groupon stock gained 31 per cent.

Spreadex spokesman Andy MacKenzie said: “Our market on the percentage change in the price of Facebook shares after the first day’s trading has seen appetite from clients in buying on the price as the big day approaches, moving the spread up from 30-35 per cent earlier in the week to 35-40 per cent.

“Our quote was as high as 60-65 per cent in February but the issuing of a greater number of shares meant our percentage change prediction fell accordingly.”

Facebook was expected to raise $16 billion (£10bn) or more today in an IPO that should value it at some £100bn – one of the biggest ever US stock flotations.