Questions and answers on blockbuster Facebook IPO
Updated 03:26 p.m., Friday, May 18, 2012
NEW YORK (AP) — Taking a company public isn’t as simple as collecting Facebook friends.
When its stock started trading Friday under the symbol FB, buyers quickly bid the price up 6 percent.
Even at that price, the 8-year-old social media company is worth $104 billion, more than such giants as Disney and Kraft.
Selling stock to the public gives companies money to run their businesses, expand and buy other companies.
Facebook says it wants to establish a public market for its shares in case it needs to raise money from investors in the future.
Who owned Facebook shares before the IPO?
Well-connected investors, employees and top insiders like company directors.
The first are the investment banks that helped the company file IPO documents with regulators and contacted pension funds, mutual funds and other big institutions to gauge a price for the shares.
In Facebook’s case, 33 banks helped; Morgan Stanley took the lead role.
The underwriters guaranteed the company that they would buy all the shares at the IPO price.
[…] the underwriters had to negotiate a price with a second group of buyers — the institutions that had promised to buy shares from them.
In Facebook’s case, all the underwriters’ shares were sold by Friday morning before the stock exchanges opened at 9:30 a.m. in New York.
The new owners who want to sell their shares had to call their traders first.
[…] the traders had to call “market makers” at the Nasdaq stock market, where Facebook’s shares are listed.
Market makers are firms that agree to hold shares in a company so buyers and sellers can easily trade them.
Mark Zuckerberg, the founder and CEO, holds 504 million shares — about one-fifth of the shares that weren’t sold in the IPO.
Zuckerberg also controls special shares that give him 56 percent of voting rights on shareholder proposals.
David Ebersman, the chief financial officer, owns 2.4 million shares worth $91 million at the IPO price.
[…] it did list “restricted stock units” — equivalent to 403 million shares — given to staffers.
Mail.ru Group, a Russian internet company that sold $745 million worth of shares in the IPO, still owns 35 million shares.
James Breyer and Accel Partners, a venture capital fund where he’s a partner, invested in Facebook in 2005.
Peter Thiel, the venture capitalist and a Facebook director, sold 17 million shares for $646 million.

