Will You Buy Stock in Facebook?

By Max Resnik

January 30, 2012 Updated Jan 30, 2012 at 6:29 PM EST

FORT WAYNE, Ind. (Indiana’s NewsCenter) – Facebook, the social media titan, is expected to file an IPO this week to make the company a publicly traded entity.

Analysts are predicting the social network with 800 million users will file a $100 billion IPO. It is also believed that Morgan Stanley and Goldman Sachs will have heavy hands in a deal for an IPO.

According to local investor and Senior Vice President of Investments at Stifel Nicolaus Tim Rooney, Morgan Stanley and Goldman Sachs would probably come out of the deal controlling 80 percent of Facebook leaving 20 percent to be available to the public.

That 20 percent, according to Rooney, will be bought up mostly by institutional investors. The rest, which Rooney predicts will not be much, will be left for the average, everyday investor to purchase.

“You have an underwriter that will distribute the shares as they see fit and unfortunately, institutional clients end up getting the majority of shares in IPOs. So that's my worry for the small investor.”

Rooney says shares will be available for small investors in the after market. Those share prices will more than likely be higher than the initial public pricing those institutional investors can take advantage of however.

“The small investor will not have the avenue. They can buy in the after market but on an IPO, you would like to buy at the initial public price because typically if it's priced right, that's where the pop usually comes from.”

It is believed that some 1,000 current Facebook employees will become millionaires once the IPO is made available.

Rooney says it is unclear whether Facebook will be listed in the NASDAQ or the New York Stock Exchange. Additionally, he says the stock symbol has yet to be determined.




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