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Facebook Prices Initial Public Offering At $38 Per Share

IPO Values Company Around $104B -- Above Amazon.com, Disney And Kraft
(credit: KITTIWONGSAKUL/AFP/GettyImages)

(credit: KITTIWONGSAKUL/AFP/GettyImages)

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NEW YORK (CBSNewYork/AP) — Facebook has priced its initial public offering of stock at $38 per share, signaling that investor demand is strong for the world’s largest online social network.

Facebook Inc. and its early investors now stand to reap as much as $18.4 billion from the IPO, if the extra shares reserved to cover additional demand are sold as part of the transaction. Without the extra shares, the offering raises $16 billion. The IPO values the company at around $104 billion, above Amazon.com, Disney and Kraft.

That success has Dobbs Ferry proud of its new billionaire baby — Westchester County native and Facebook CEO Mark Zuckerberg.

“If you have the right idea and you have to envision it and have faith in it and believe. I definitely think that’s a great thing,” one local resident told 1010 WINS’ Al Jones.

1010 WINS’ Al Jones Reports From Dobbs Ferry

“Amazing that someone who is local, that grew up in this area can achieve great things,” said another.

The Facebook offering is shaping up to be one of the largest in history — a big payoff for a company that started out eight years ago with no way to make money.

The $38 price tag is what the investment banks orchestrating the offering will sell the stock to their clients.

Facebook’s stock is expected to begin trading on the Nasdaq Stock Market sometime Friday morning under the ticker symbol “FB.” That’s when so-called retail investors can try to buy the stock.

Facebook is the third-highest valued company to ever go public, according to data from Dealogic, a financial data provider. Only the two Chinese banks have been worth more.

However, the IPO has been mired in some controversy.

A Facebook co-founder, 30-year-old Eduardo Saverin, recently relinquished his U.S. citizenship ahead of the initial public offering.

Saverin currently lives in Singapore, which does not have a capital gains tax, meaning he could avoid as much as $100 million in taxes.

That decision has prompted anger from Sen. Chuck Schumer.

“Eduardo Savern wants to de-friend the United States of America just to avoid paying taxes,” Schumer said.

Schumer is co-sponsoring a bill that would impose a 30 percent capital gains tax on people who renounced their citizenship, unless they can prove avoiding taxes wasn’t the reason.

Meanwhile, for the Harvard dorm-born social network that re-imagined how people communicate online, the stock sale means more money to operate the data centers that hold the trove of status updates, photos and videos shared by Facebook’s 900 million users. It means more money to hire the best engineers to work at its sprawling Menlo Park, Calif., headquarters, or in New York City, where it opened an engineering office last year.

And it means early investors, who took a chance seeding the young social network with start-up funds six, seven and eight years ago, can reap big rewards. Peter Thiel, the venture capitalist who sits on Facebook’s board of directors, invested $500,000 in the company back in 2004. He’s selling nearly 17 million of his shares in the IPO, which means he’ll get some $640 million.

Friend Don’t Let Friend Buy Facebook?  1010 WINS’ John Montone Reports

While most Facebook users won’t see a penny from the offering, they are all intimately familiar with the company, so it resonates as something they understand.

Though Zuckerberg is selling about 30 million shares, he will remain Facebook’s largest shareholder. He set up two classes of Facebook stock, building on the model Google co-founders Larry Page and Sergey Brin created as part of the online search leader’s 2004 IPO. The dual class structure helps to ensure that he and other executives keep control as the sometimes conflicting demands of Wall Street exert new pressures on the company.

As a result, with the help of early investors who’ve promised to vote their stock his way, Zuckerberg will have the final say on how nearly 56 percent of Facebook’s stock votes.

True to form, Zuckerberg and Facebook’s engineers are ringing in the IPO on their own terms. The company is holding an overnight “hackathon” Thursday, where engineers stay up writing programming code to come up with new features for the site. On Friday morning, Zuckerberg will ring the Nasdaq opening bell from Facebook’s headquarters.

(TM and Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)