Facebook halts orders for IPO shares

Thursday, 17 May 2012 09:10

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Facebook has stopped taking share orders ahead of tomorrow’s stock market flotation.

Fierce demand from social networking fans eager to buy a stake prompted the company to raise the number of shares for sale by 25 per cent.

This drove the price up from $28-$35 (£18-£22) to $34-$38 (£21-£24) per share, valuing the company at between $93 billion and $104 billion (£58 billion to £65 billion).

If all the shares are sold at the higher price, the IPO would be the third biggest initial share sale in American history, after Visa and General Motors.

But the new shareholders might not have a great deal of input in how the company operates.

The shares being sold are ‘A’ shares, carrying one vote per share – however, the owners’ shares are ‘B’ shares, each carrying 10 votes.

Critics are already questioning the profitability of the eight year old social networking site.

General Motors has just cancelled its $10 million (£6.3 million) advertising contract.

The firm said it did not believe that paid-for advertising on Facebook influenced many consumers’ car choice.

Facebook has more than 900 million users worldwide but currently makes only around $5 a year per member.

It is planning to tap into the mobiles, smartphones and tablet PC market as a means of boosting revenue.

Founder Mark Zuckerberg said the site’s mission is to make the world “more open and connected”.

 

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