Facebook – What Price Should You be a buyer of the IPO? (Update 1)

We blogged about Facebook on February 4, 2012, here, and concluded that any price under $39 would be a good purchase price.  This blog shows our rational using our unique model price math.  Interestingly, the proposed range the underwriters have given for the IPO is $28 – $38 per share.  Of course most of us will not be receiving any IPO shares so it will be interesting how these shares trade in the after market.

The highlight of the various filings was the update of the first quarter were revenues worldwide decreased from $943 to $872 million.  This should cool the froth marginally.

We have plugged in our guesstimates and here is the model price chart on Facebook.

Facebook with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of FB subsequent to this post will be maintained on Facebook, here.

Why do the EBV lines jump?  Facebook will be receiving cash of about $5.6 billion for the sale of their Class A shares.  This increases the balance sheet, therefore boosting our lines.

Interesting the IPO range is less then the private market trading of shares as picked up from Bloomberg.  The last trade seems to be $45 around the end of March.

Looks like the IPO will be coming by the end of May, to me, ModelPriceGuy, this will be fascinating to watch and potential of financial history in the making.

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