Using Google, Microsoft, and Apple to Predict Facebook’s IPO

When Facebook has its IPO, expected in mid-May, it will not be the first high tech company to IPO and create 1,000 instant millionaires. Google was the latest large IPO to instantly shower wealth on a thousand loyal employees. A comparison of Google, Apple and Microsoft’s IPOs may give us a clue as to what to expect when Facebook has its IPO in May.

Google IPO

Google had its IPO on August 25th, 2004 for 19.6 million shares that were offered at a price of $85 per share. Of the 19.6 million shares, 14.1 million were floated by the company and 5.4 million were sold by shareholders. Google stock soared 18 percent to close at $100.34 on its first day of trading.

Google continues having the 271 million remaining shares under its control.
At the time of its IPO, Google’s 3,021 employees were all equity holders and many of them became instant millionaires when the company went public.

The IPO was originally priced between $108 and $135, but both the price and the share amounts were cut just before the offering. Google wound up pricing the 19.6 million shares at $85. Google stock currently trades above $600 per share, more than 800 percent higher than its original IPO price.

Microsoft IPO

Microsoft had its IPO on March 13th, 1986, with the company originally offering 2.5 million shares, which was later increased to 3.1 million shares due to high demand. The stock’s IPO price was $21 per share, but the first trade to go by on the listed shares was at $25.50, reflecting the enormous demand for the stock.

The stock settled at $27.75 after having traded as high as $29.25 per share during the day. At today’s price of more than $30 per share, an investor who bought the stock at $21 per share would have made more than $9,000 per share, adjusted for splits, had they held their stock until now.

Apple IPO

Apple Inc.’s IPO took place on December 12th, 1980 at $22.00 per share. At the time of the IPO, Apple had generated an enormous amount of capital for a company going public at the time and instantly created 300 millionaires, more than any company in history.

At $22.00 per share and adjusting for three stock splits, the original IPO price for Apple stock was effectively $2.75. Apple Inc. has eclipsed $600 recently. The return on a share of Apple stock if held since the IPO would have returned an investor 995 percent on their money.

How will Facebook Compare

The details for the upcoming IPO have not yet been disclosed, nevertheless, according to the numbers on the company’s S1 SEC filing, Facebook plans to raise $5 billion, which for the number of shares they plan to sell, would value the company between $85 billion and $100 billion.

Some analysts are expecting an IPO price of between $35 and $40 per share. How will the shares perform once the initial IPO euphoria wears off? Anything is possible, if the shares are priced on the high end, then the IPO may not attract as many investors as originally expected.

By the same token, if the price of the IPO is on the lower end, then prices might move up in a more orderly fashion, as they did when Google cut its price and share amount of the offering. In the long-term, Facebook’s stock performance will depend on how well the company can maintain profitability.

Published on Mar 19, 2012
By InvestorGuide Staff

Copyrighted 2020. Content published with author's permission.

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