Facebook to reportedly boost IPO price range

The social network originally planned to offer shares at a price between $28 and $35. One report suggests it may increase that range to a level that would value the company at up to $108 billion.

David Hamilton Assistant Managing Editor, CNET News
David Hamilton is the assistant managing editor of CNET News. He has been writing and editing business and tech coverage for about two decades -- the majority of that at the Wall Street Journal in both Tokyo and San Francisco. He is a two-time winner of the Overseas Press Club award and has written for numerous magazines and blogs, including Slate, Science, VentureBeat, CBS Interactive's BNET, California Lawyer and the New Republic.
David Hamilton
2 min read
James Martin/CNET

Some market reports suggest Facebook may bump up its expected IPO share-price range by roughly 20 percent, possibly as early as tomorrow.

Just over an hour ago, CNNMoney markets writer Maureen Farrell tweeted that an unnamed source told her Facebook's underwriters will raise its initial offering price to a range of $35 to $40 tomorrow (h/t VentureBeat). A week and a half ago, Facebook said it planned to offer shares at a price between $28 and $35.

At the upper end of that whispered new range, Facebook would be worth $108 billion. And then everyone who's been up in arms over the possibility that the social network might end up valued at less than a pleasantly round $100 billion can finally unclench. (Editor's note: Early Monday evening, Pacific time, All Things D's Kara Swisher reported that several sources told her the range would be from $34 to $38, making the highest valuation close to $100 billion, fully diluted.)

You can calculate how much of an increase the new price range, should it actually materialize, represents over the old one by taking the average of each range -- $31.50 for the current one, $37.50 for the rumored one -- and then calculating the percentage difference. (It's actually 19.05 percent, should you happen to care that much.)

What rumors like this one mostly tell you is that the madness of crowds is starting to roar pretty loudly on this occasion. The IPO price range, which companies are required to disclose long before they go public, often bears little resemblance to the actual offering price. In many cases -- especially here -- these price ranges essentially act as marketing devices that help whip up investor frenzy for IPOs that are expected to be hot.

The only price that really matters is the one Facebook and its underwriters establish the day before trading begins. That price is what initial investors will pay for shares. The next day, it's all up to the markets.

Talk of a bump to Facebook's IPO price range is far from the only rumor swirling around the social network at the moment. Earlier today, Bloomberg reported that Facebook might stop taking investor orders by tomorrow instead of Thursday, raising the possibility that the offering might take place earlier than expected.

Update, 5:23 p.m. PT: Adds mention of ATD's report on the price range.