Facebook prices IPO at $38 US

Social networking giant Facebook has priced its initial public offering at $38 US a share, generating $18.4 billion for its shareholders.

That makes it the largest internet IPO, the third-largest in the U.S. and the world’s seventh biggest.

At that price, Facebook, which had revenue of $3.7 billion last year, will have a market value of $104 billion, considered a sky-high valuation.

"There seems to be somewhat of a hype around the stock offering," says Gartner analyst Brian Blau.

The shares will begin trading Friday on the Nasdaq exchange and are expected to trade under the ticker symbol "FB."

The company started eight years ago in a Harvard dorm, growing to revolutionize how people communicate online.

The proceeds means more money both to operate the data centres that hold the trove of status updates, photos and videos shared by its 900 million users and to hire the best engineers to work at its sprawling Menlo Park, Ca., headquarters, or in New York City, where it opened an engineering office last year.

It also means a huge return for early investors.

CEO and founder Mark Zuckerberg, who turned 28 on Monday, will get $1.14 billion. Investment bank Goldman Sachs will reap $1.25 billion.

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.

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 per cent 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.