Facebook sets largest IPO in motion at $38 a share

Facebook on Thursday set the price of $38 per share for its initial public offering that would give the social network a market value of $104 billion .FULL COVERAGE

The price came one day before Facebook begins to trade on the Nasdaq stock exchange Friday under the symbol "FB". The announcement comes amid keen anticipation among investors for a piece of the world's biggest social network

At $38 dollars a share, the world's No.1 social network company will sell 421 million shares, raising about $16 billion, the largest ever among all internet companies.

Facebook said that it raised $16 billion for itself and its early investors in an initial public stock offering that values Facebook at $104 billion. That's more than Amazon.com and other well-known companies such as Kraft, Walt Disney and McDonald's. It's a big windfall for a company that began eight years ago with no way to make money.

Facebook's offering is the culmination of a year's worth of Internet IPOs that began last May with LinkedIn Corp. Since then, a steady stream of startups focused on the social side of the Web has gone public, with varying degrees of success. It all led up to Facebook, the company that's come to define social networking by getting 900 million people around the world to share everything from photos of their pets to their deepest thoughts.

It has done so while managing to become one of the few profitable Internet companies to go public recently. It had net income of $205 million in the first three months of 2012, on revenue of $1.06 billion. In all of 2011, it earned $1 billion, up from $606 million a year earlier. That's a far cry from 2007, when it posted a net loss of $138 million and revenue of $153 million.

The $38 share price is the price at which the investment banks arranging the offering will sell the stock to their clients. In an IPO, the banks buy the stock first from the company and the early investors and then sell to the public. If extra shares reserved to cover additional demand are sold as part of the transaction, Facebook and its early investors stand to reap as much as $18.4 billion.

For a company that was born in a Harvard dormitory, the stock sale means more money to build on the features and services it offers users.

With input from AP