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I don't know a lot about stock, so if you could explain to me how this works I'd be very thankful. Facebook is worth something like $100 billion, but their IPO

I don't know a lot about stock, so if you could explain to me how this works I'd be very thankful. Facebook is worth something like $100 billion, but their IPO is only for $5 billion. Doesn't that mean 95% of the company is still owned by... Facebook? (??) What fraction of the company are they selling by having a $5b IPO?

aliston 15y ago
$5 billion is the value of the new shares that are being issued as part of the ipo. The valuation is expected to be between 75 and 100 billion, so essentially that means FB is selling between 5 and 6.6 percent of the company to raise the $5 billion. In that sense, it works exactly the same way that a new round of funding works from a VC. It doesn't however, mean that 95% of the company is owned by "facebook" since those shares can (presumably after some lockup period) be traded publicly. A lot of employees and investors, for example, will probably unload some of their shares on the public market.