Facebook Inc’s US$11.8 billion initial public offering (IPO) will cement the status of 27-year-old Mark Zuckerberg as one of the world’s richest men and put his social network among the highest-valued companies in the US.
Facebook is offering about 337.4 million shares for US$28 to US$35 each, according to a regulatory filing on Thursday. At the upper end of that range, the co-founder’s stake would be US$17.6 billion, making him richer than Microsoft Corp’s Steve Ballmer and Russian steel billionaire Vladimir Lisin, who are both twice his age, according to the Bloomberg Billionaires Index.
Zuckerberg, who began the service for Harvard classmates as a 19-year-old in his dorm room, built Facebook into the most popular social-networking site in the world, topping 900 million users last quarter. Now he has to prove he has the leadership skills to deliver enough growth to justify the company’s valuation, said Paul Saffo, managing director at Discern Analytics in San Francisco.
“The whole story about the Silicon Valley is hard-working, entrepreneurial tech geeks getting big payoffs,” said Saffo, whose firm provides analytics to institutional investors.
“The challenge he has is: Can Mark grow as quickly as his company has grown? And can Mark grow faster than his company has grown? Because, of course, that’s what a leader must do,” he added.
Zuckerberg, who has developed a reputation for introducing new products quickly, helped the company supplant MySpace as the most popular social service while also navigating competitive threats from Google Inc, Twitter Inc and other social-media sites. The company has expanded its appeal by enabling developers to build applications on top of the platform, offering users music, movies, e-commerce options and other extras.
“They stayed nimble, like a startup of a smaller size,” said Jeremiah Owyang, an analyst at Altimeter Group. “The culture encouraged them to experiment and innovate on a regular basis, even when they had the lead.”
Facebook’s IPO would value the company at as much as US$96 billion. It is offering 180 million of the shares, while existing owners such as Accel Partners and Digital Sky Technologies are offering 157.4 million shares, according to the filing. Zuckerberg is offering 30.2 million of his 533.8 million shares. The majority of his net proceeds would be used to pay taxes associated with exercising a stock option.
He may control about 57 percent of the voting power of Facebook’s outstanding capital stock after the offering, according to the filing.
Zuckerberg has shown patience in bringing Facebook to the brink of an IPO. After starting the company in 2004, he rolled it out to other college campuses, reaching 1 million users by the end of the year.
Microsoft CEO Ballmer’s net worth was US$15.4 billion as of Thursday, according to the Bloomberg Billionaires Index.