All eyes on Wall Street for Facebook’s $104bn debut

Investors are braced for Facebook’s Wall Street debut today after the social network raised about $16 billion in one of the biggest initial public offerings in history.

Valued at $104 billion, Facebook is larger than Starbucks and HP combined, sparking intense speculation on how much higher its valuation will rise once shares start trading.

“A 15% to 20% pop is in the realm of possibility,” said Tim Loughran, a finance professor at the University of Notre Dame. “Given they already moved their IPO range up and increased the size, that’s bullish to begin with.”

Facebook priced its offering at $38 a share yesterday, but the price could move higher when shares begin trading under the FB symbol on the Nasdaq this afternoon.

“With mobile usage growth exceeding desktop, monetisation in the near term could be reduced given little-to-no ad coverage on mobile

Some expect shares could rise 30% or more, despite ongoing concerns about Facebook’s long-term money-making potential. An average of Morningstar analyst estimates puts the closing price for Facebook shares at $50.

The IPO, expected to mint more than a thousand paper millionaires at the company, has sparked hopes of a boom in sales of everything from San Francisco Bay Area real estate to automobiles.

Income concerns

At $38 a share, Facebook would trade at over 100 times historical learnings versus Apple’s 14 times and Google’s 19 times.

For all the high expectations surrounding Facebook, the company faces challenges maintaining its growth momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones.

“With mobile usage growth exceeding desktop, monetisation in the near term could be reduced given little-to-no ad coverage on mobile, challenged by limited screen sizes,” said a report last week from Susquehanna Financial Group.

Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.