Facebook value ‘less than $100bn’

FACEBOOK has given itself a value slightly below the much touted $100 billion (£62bn) mark as it sets off on a final roadshow to woo investors for its forthcoming flotation.

The eight-year-old social network business indicated a price range of between $28 and $35 a share for its initial public offering, which would value the company at between $77bn and $96bn.

Facebook’s 27-year-old founder and chief executive Mark Zuckerberg will begin briefing analysts and investment houses on Monday as he seeks to drum up support for the sale, and the shares could start trading on New York’s tech-focused Nasdaq exchange as predicted on 18 May.

Opinions on the valuation of a company that made just under $1bn in profit last year remain divided. Facebook is relying on expectations that it can continue its formidable rate of growth to support its pricing, but recent results offered mixed messages – the firm notched up its 900 millionth subscriber, but revealed a 6 per cent quarter-on-quarter slide in revenues at $1.1bn in the three months to 31 March.

Quarterly profits fell to $205 million, from $233m, as the company pumped cash into hiring more staff, with its headcount growing by 1,100 to 3,539 in the past year.

Analysts said that the fall in advertising revenues had been bigger than expected and warned that Facebook could have a tough time finding subscribers for its IPO.

But Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly $200m and is not selling in the IPO, said the price range announced was conservative and may be a tactical move. He said the company’s brokers will probably “walk the range up” after gathering support.

At the middle of that valuation, Facebook would raise $5.6bn for itself, while existing shareholders who are selling some of their stake in the IPO would receive just under $5bn. Zuckerberg is among those selling but will retain full control of the company, despite owning less than half the shares.