Okay, so they got it done. The largest wealth creation event in Wall Street and Silicon Valley history. Facebook (Nasdaq: FB) raised $18.4 billion in its IPO, paying out $8.4 billion in wealth to founders, investors, and employees.
That's a lot of rich people.
By all measures, the IPO was a great success and an even grander liquidity event, with Facebook ultimately selling 420 million shares at $38 per share to the public to get that $18.4 billion. In midday trading, shares changed hands at about $42, with a daily range of $38 to $45.
You can track the IPO in real-time below.
Deals like these make me wince. The media hype, the fanfare, and accolades are deserved, of course, because it happens only once a decade. But it sets up for enormous disappointment.
In classic Silicon Valley form, Facebook has defined the Valley's Zeitgeist for the decade, piling in on a big trend for years and then unleashing it on Wall Street in a wave of liquidity.
In just the past six months, we've had big IPOs of Internet and social-networking firms Zynga, LinkedIn, Trip Advisor, and Yelp. Facebook is the Big Kahuna, the flag to stick in the hill at the top.
Does it mark the top? For now, I think so -- at least in terms of this mini-boom. An anticlimactic denouement is likely with financial malaise spreading throughout the world, European banks wobbling on the brink of the abyss, and the United States struggling to figure out how to pay its debts while a a Facebook founder renounced his citizenship to dodge his US tax bill.
In the long run, though, the Internet is not through with wealth creation. Many of these newly minted IPO Internet firms are healthier businesses than the shakier crop from 1999. They will grow on to take advantage of mobile and social networks. They will flourish and many will grow much larger.
The challenge for Facebook, of course, is that so much growth is already baked into the cake, as our tech analyst Robert Irr observed earlier on this site.
Google has $40 billion in revenue. Facebook has about $5 billion. Google's valuation is only twice that of Facebook's. Does the market value this relationship fairly? Will Facebook really increase its revenue by eight-fold in the next few years?
Let's not crash the party. It was a huge IPO, by any measure. It's a defining moment like Netscape's IPO in 1995 and Google's IPO in 2004.
Google investors did great, returning about five times their money in eight years. Netscape investors, not so well.
The sheer volume of magnitude of Facebook's IPO will have financial mavens marveling for years. Trading volume exceeded 100 million shares in the first three minutes of trading.
Of course, this kind of volume means problems. The IPO suffered several snafus, including trading problems that left some early traders waiting to find out whether or not they had shares they ordered. Nasdaq said it was investigating the issues.
And how rich is Zuck -- Facebook's founder? Well, fortunately, we have a way to track that. He clocked in at $20 billion or so this morning. Not bad for a college dropout.
In conclusion, I would like to wish all those that participated in building a company for the largest IPO my congratulations. And if you are wondering what to do with your money, I have some ideas. Text me.
But now, get back to work. You have a lot of valuation-building to do to live up to those investor expectations. And I have to get back to the Internet myself, shoveling content in order to build my own valuation.