By Brian Womack, Sarah Frier and Lee Spears - May 8, 2012 5:08 AM GMT+0700
Facebook Inc. (FB) Chief Executive Officer Mark Zuckerberg and other officials touted growth prospects for the largest social network in a meeting with hundreds of would- be investors ahead of its record initial public offering.
Investors watched a video featuring pitches by Zuckerberg, Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman, and then asked questions of the trio, said several people who attended today’s meeting at the Sheraton New York Hotel. The executives discussed their reasons for acquiring photo-sharing site Instagram and told investors they were optimistic about potential for future gains at Facebook.
Mark Zuckerberg, chief executive officer and founder of Facebook Inc.. Photographer: David Paul Morris/Bloomberg
May 7 (Bloomberg) -- Michael Pachter, a managing director at Wedbush Securities, talks about Facebook Inc.'s leadership and planned public stock offering. He speaks with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
May 7 (Bloomberg) -- Arvind Bhatia, an analyst at Sterne Agee & Leach Inc., talks about the outlook for Facebook Inc.'s initial public offering, the company and its shares. Facebook Chief Executive Officer Mark Zuckerberg is meeting would-be investors today as the largest social-networking service begins marketing its IPO, says a person with knowledge of the matter. Bhatia speaks with Betty Liu and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)
May 4 (Bloomberg) -- Francis Gaskins, president of researcher IPOdesktop.com, talks about the outlook for Facebook Inc. He speaks with Emily Chang on Bloomberg Television's " Bloomberg West." (Source: Bloomberg)
May 7 (Bloomberg) -- Facebook Inc. Chief Executive Officer Mark Zuckerberg and other officials touted growth prospects for the largest social network in a meeting with hundreds of would-be investors ahead of its record initial public offering. Bloomberg's Jon Erlichman reports on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)
May 7 (Bloomberg) -- Barton Biggs, managing partner and co-founder of Traxis Partners LP, talks about the outlook for the euro region and his investment strategy. He speaks with Betty Liu and Dominic Chu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
May 4 (Bloomberg) -- Alexis Ohanian, co-founder of Reddit.com, talks about the outlook for Facebook Inc.'s initial public offering. Ohanian speaks with Scarlet Fu on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Mark Zuckerberg, founder and chief executive officer of Facebook Inc., leaves the Sheraton hotel in New York. Photographer: Scott Eells/Bloomberg
Facebook plans to raise as much as $11.8 billion in its IPO, the biggest ever for an Internet company. Zuckerberg, 27, has had to pitch his business model during Facebook’s years as a private company and probably won’t have trouble communicating the mission to prospective public investors, said Herman Leung, an analyst at Susquehanna International Group.
“It’s important to hear directly from him for investors who are about to put millions and millions of dollars into a company,” said Leung, who is based in San Francisco. “Convincing others now they should buy shouldn’t be that hard for a company that has amassed a user base of over 900 million.”
Investors’ Questions
Potential investors waited in a line that snaked through the hotel’s lobby and around the side of the building for a meeting that started about an hour late. CNBC televised footage of a hooded sweatshirt-clad Zuckerberg arriving at the hotel.
“The questions were all toward long-term elements of the business,” said Samuel Schwerin, managing partner at New York- based Millennium Technology Value Partners, which oversees $1 billion, including Facebook stock it bought in 2008. Schwerin attended the meeting today, and said he’ll add more shares in the IPO. “One of the things I was surprised by was the level of interest in the fundamental elements of how the company grows and how early it is in the value-creation story for Facebook.”
The video shown today had been posted online last week and many investors had already seen it. Facebook also has arranged meetings in Boston and Palo Alto, California, this week.
Executives addressed Facebook’s slowdown in revenue growth, saying the company is now facing a larger base of users and is working to be useful to them and advertisers, according to meeting attendees. Facebook is working on new ways to make money from mobile users, and on getting partners besides game maker Zynga Inc. to use its platform and currency, which is used to buy so-called virtual goods.
Instagram Deal
Zuckerberg told investors that the $1 billion Instagram acquisition, announced last month, was contemplated over a long period. He said he had watched the company grow for a while. He said opportunities like Instagram are unique, according to several meeting attendees.
The Menlo Park, California-based company is seeking a market value of as much as $96 billion. Facebook is offering 337.4 million shares at $28 to $35 each, and is scheduled to price the offering on May 17, data compiled by Bloomberg show. The shares will be listed on the Nasdaq Stock Market under the symbol FB. Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. (GS) are leading the sale.
Facebook is offering 180 million shares, while existing owners such as Accel Partners, Goldman Sachs and Digital Sky Technologies are offering 157.4 million shares. Zuckerberg is offering 30.2 million of his 533.8 million shares, and may control about 57 percent of the voting power of Facebook’s capital stock outstanding after the offering, the filing shows.
Attendance Required
“His attendance might demonstrate that the company processed the message that Mark’s absolute voting control makes his presence, at least at some of the larger meetings, much more important than would otherwise be the case,” Lise Buyer, principal at Class V Group in Portola Valley, California, said in an e-mailed statement. “The company’s job -- Mark, Sheryl, David together -- is to convince investors that Facebook’s brightest days are ahead and that therefore, there is significant room for an increase in the company’s value.”
Sandberg, who isn’t selling in the IPO, holds 1.9 million shares.
The initial share sale would eclipse the 2004 IPO of Google Inc. (GOOG), the world’s most valuable Internet company. Google’s offering, the same year Zuckerberg helped found Facebook, raised $1.9 billion and valued the company then at about $23 billion.
To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net
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