Facebook Inc. raised $16 billion in the biggest initial publicoffering by a technology company in history, pricing the shares atthe top end of an increased range.

The social network, led by 28-year-old Mark Zuckerberg, sold421.2 million shares at $38 each, data compiled by Bloomberg show.This week, Menlo Park, California-based Facebook expanded the IPOto meet demand, allowing backers Goldman Sachs Group Inc. and AccelPartners to reap more gains.

The offering marks the culmination of Facebook's evolution inless than a decade from a Harvard University dorm-room project intoa social network with more than 900 million users. While Zuckerbergpersuaded investors to buy the shares at a higher price-to-earningsmultiple than almost every company in the Standard & Poor's 500Index, he now faces stemming slowing sales growth after profit fell12 percent last quarter.

“It'll be a slam dunk when the shares surge on the first day oftrading,” said Walter Todd, who oversees about $940 million aschief investment officer of Greenwood Capital in Greenwood, SouthCarolina. “But I'm not sure that'll still be true a little furtherout.”

Todd said he'll wait until Facebook has reported quarterlyearnings at least once before he considers buying the shares. Thestock is scheduled to start trading tomorrow on the Nasdaq StockMarket under the symbol FB.

Facebook hired more than 30 underwriters for the sale, led byMorgan Stanley, JPMorgan Chase & Co. and Goldman Sachs.Underwriters will have the option to buy an additional 63.2 millionshares from the company and its holders after the IPO, according toa regulatory filing yesterday.

Facebook boosted the deal's size amid a two-week series ofmeetings where Chief Executive Officer Zuckerberg, Chief OperatingOfficer Sheryl Sandberg and Chief Financial Officer David Ebersmanpitched the sale to investors across the U.S. Yesterday Facebooksaid it planned to sell 421.2 million shares at $34 to $38apiece.

The offering eclipses the 2004 IPO of Google Inc., one ofFacebook's chief competitors for online advertising. Google raised$1.9 billion in its initial share sale, including an over-allotmentoption. The shares sold at $85 apiece, giving Google a market valueof about $23 billion, or about 10 times sales in the 12 monthsthrough June 30, 2004.

Today Mountain View, California-based Google is worth more than$200 billion, making it the most valuable Internet company. At thetop end of Facebook's planned IPO range, the social network'smarket value amounted to more than $104 billion.

Captivating Silicon Valley

“Facebook has captivated the attention of the financial andtechnology communities because of the sums involved and becauseit's really something that touches most everyone's onlineexperience,” said Ray Valdes, an analyst at Gartner Inc. in SanJose, California. “They want to do well for the initial sellers,the initial buyers and the later buyers. That's very hard to do,that combination.”

Venture capital firm Accel, based in Palo Alto, planned to offer49 million shares, while Goldman Sachs aimed to sell 28.7 million,according to terms Facebook disclosed yesterday. Digital SkyTechnologies planned to sell 45.7 million shares, and Tiger GlobalManagement planned to sell 23.4 million shares. Facebook executivesand directors planned to sell 189.4 million shares.

Some institutional investors had balked at buying into Facebookover concern about the site's growth prospects, people withknowledge of the matter said last week. While Facebook's IPO termsvalued the company more expensively than members of the S&P 500relative to sales, roadshow attendees asked Zuckerberg how he willretain momentum after revenue surged 24-fold from 2007 through2011, according to observers present.

The social network topped $4 billion in revenue in the 12 monthsthrough March 31, with more than 900 million users. Sales arepoised to rise 64 percent to $6.1 billion in 2012, according toresearcher EMarketer Inc., which would be the third straight yearof slowing growth. Last month, Facebook said first-quarter profitfell to $205 million as sales growth slowed and marketing costsmore than doubled.

Growth in advertising sales isn't keeping pace with gains inusers, many of them logging on from handheld devices, Facebook saidthis month. This put pressure on company executives to articulatetheir mobile strategy as they marketed the stock to potentialinvestors ahead of the IPO. Facebook has said it would add mobileadvertising along with new ads to reach users when they log off thecompany's website.

Facebook still faces hurdles in traditional Web advertising.General Motors Co., the world's biggest automaker by vehicles sold,said this week it was halting display ads on Facebook, whilemaintaining brand-promotion pages.

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.