After shying away from the public markets for years, Facebook is ready for its debut.
On Thursday, Facebook set the estimated price for its initial public offering at $28 to $35 a share, according to a revised prospectus. At the midpoint of the range, the social networking company is on track to raise $10.6 billion, in an debut that could value the company at $86 billion.
The company is finalizing its prospectus, as it prepares for a road show to meet investors in cities like New York, Boston, San Francisco, Chicago, and Baltimore.
On Friday, Facebook executives will meet in New York with the sales forces of the company’s underwriters to brief them on the I.P.O. presentation, according a person with knowledge of the matter. Those salespeople will then reach out to prospective investors to begin shopping the offering. The I.P.O. has attracted a small army of 33 underwriters, led by Morgan Stanley, JPMorgan Chase and Goldman Sachs.
The filing on Thursday is the first time Facebook has officially indicated where its shares will be valued. The company is expected to begin trading on the Nasdaq, under ticker “FB,” in two weeks, following an eight- to nine-day road show, according to people familiar with the matter. Given that time frame, Facebook should begin trading May 17 or May 18, these people added.
The upcoming roadshow will help the company and its bankers gauge investor demand and settle on a final price, which could be above the expected range. Facebook’s underwriters will weigh a multitude of factors, such as demand, market conditions and how much room to leave for a first day pop. While companies like to see a healthy jump on the first day of trading, a huge pop could mean that the offering was priced far too conservatively.
If Facebook reaches for the top end of its range and if its underwriters exercise an option to sell an additional 50.6 million shares, the company will raise$13.6 billion in its offering.
Investors have been eagerly awaiting the Facebook offering, which is on track to be the largest Internet I.P.O. on record, trumping the debut of Google in 2004. They are lured by the prospect of strong growth: in the first quarter, Facebook’s daily active users, a measure of engagement, increased by 41 percent, to 526 million.
Still, Facebook is experiencing the growing pains typical of a technology start-up. While revenue continues to rise, profit sputtered in the first three months of the year, falling 12 percent, to $205 million, as expenses jumped significantly.
A spokeswoman for Facebook declined to comment.
For Facebook’s insiders, the I.P.O. represents an opportunity to take some money off the table and to take care of hefty tax charges. Facebook’s 27-year-old chief Mark Zuckerberg is planning to sell 30.2 million shares, worth $951 million, based on the mid-point of the range. Mr. Zuckerberg, who will retain voting control of 58.8 percent of the company after the I.P.O., plans to use the proceeds from thesale to cover tax obligations.
Other big sellers include Accel, one of the earliest venture backers of the social network, which is selling about 19 percent of its stake, or 38.2 million shares. Russian billionaire Yuri Milner’s DST Global is selling about 20 percent of its holdings, or 26.3 million shares.
And Goldman Sachs, which organized a large financing round for Facebook just last year, is also unloading 20 percent of its stake, or 13.2 million shares.