Facebook said last week that it expects to price its shares at $28 to $35. At that range, there is plenty of room for the stock to run up on its first day. And given that investors literally lined up around the block today to hear CEO Mark Zuckerberg, there is little doubt that Wall Street will eagerly buy Facebook’s shares.
How big will Facebook’s first-day pop be? Take our poll here.
Looking at the biggest first-day gainers since 2001 (see table below from Renaissance Capital), it’s hard to imagine a scenario in which Facebook doesn’t take the No. 1 spot on that list. To do that, Facebook would need to gain more than 354%, the increase that Baidu saw after it priced its shares at $27 apiece on Aug. 4, 2005.
There are already signs that Wall Street will go nuts on the Facebook offering. Professional social network LinkedIn priced at $45 per share in May 2011 and its shares more than doubled in price on their first day of trading.
A couple of months before LinkedIn’s offering, Chinese Internet company Qihoo 360 Technology exploded out of the gate, gaining more than 134% on March 29, 2011.
Some other data points to consider before you make your Facebook prediction: Of the 66 U.S. backed IPOs this year (including those without VC or PE backers), 35 (or 63%) priced within their filing range, while 19 (or 22%) priced below the low filing price and 12 (or 14%) priced above their high filing price, according to Thomson Reuters (publisher of peHUB). Overall, those data show that the market believes most offerings are priced correctly, but the underwriters don’t get it right every time.
Among the dozen companies that priced above the high point of their range were Internet players CafePress and Yelp. (See the top 10 list below.) CafePress didn’t move much on its first day, but Yelp not only priced above its range, it also saw its share price shoot up more than 63% from $15 to close at $24.58 on its day of trading.
So, how do you think Facebook will do? Take our poll.
|Top First-Day Returns Since 2001|
|Company Name||Ticker||IPO Date||IPO Price||Return|
|Qihoo 360 Technology||QIHU||03/29/11||$14.50||134.50%|
|Chipotle Mexican Grill||CMG||01/25/06||$22.00||100.00%|
|Source: IPO investment adviser Renaissance Capital|
|Ten Companies that Priced Above High File Price in 2012|
|Name||Proceeds $M (including amt oversold)||Offer Price||Issue Date||VC-Backed?|
|Source: Thomson Reuters. Data are for 1/1/12 – 5/7/12.|
Image credit: Fireworks photo courtesy of ShutterStock
Take your pick!
- Buyouts delivers exclusive news and analysis about private equity deals, fundraising, top-quartile managers and more. Get your FREE trial or subscribe now.
- VC Journal provides exclusive news and analysis about venture capital deals, fundraising, top-quartile investors and more. Get your FREE trial or subscribe now.