Facebook shares open up 13%

Social networking giant raises more than $16 billion in initial public offering

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Facebook shares jumped 13% late Friday morning as the most highly anticipated initial public offering in memory finally hit Wall Street with 65 million shares trading almost instantly after frenzied demand caused a half-hour technical delay in the stock's debut.

Shares (NASDAQ: FB) opened at 42.99, or 13% above the $38 offer price set Thursday afternoon, around 11:35 a.m.

But don't be surprised to see Facebook finish much, much higher on its first day of trading because the rubes have been stoked for months by the financial/tech/media hype machine. (And that's all I'm going to say about that subject today.)

The social networking giant bumped up its share-price range earlier in the week to $34 to $38 from $28 to $35 as it claimed torrid demand for shares during its recent road show.

At $38 a share, Facebook is valued at $104 billion. The company started in CEO Mark Zuckerberg's Harvard dorm room is expected to raise more than $16 billion in the offering, and could raise $18.4 billion if extra shares are sold. (Which they will be because it's cash-out time for many of Facebook's early investors and executives. I mean, why hold back?)

Facebook's IPO is the fourth-largest in U.S. history and the largest ever among Internet companies, exceeding Google's 2004 initial public offering.

Of the most prominent Internet IPOs of the past year, only professional social networking site LinkedIn (NASDAQ: LNKD) had an eye-popping initial offering, ending its first day of trading at more than twice the offer price. Daily-deals site Groupon (NASDAQ: GRPN) closed up 30% in its debut, while social games site Zynga (NASDAQ: ZNGA) actually finished its first day on the ticker 5% below its $10 offer price.

But compared to Facebook -- which has 900 million users and is profitable, yet has real questions about slowing growth as well as its ability to generate revenue from mobile devices, which more and more members are using to access their accounts -- last year's big "social media" IPOs were child's play.

Facebook was expected to begin trading around 11 a.m., but traders began experiencing problems lining up buy and sell orders electronically.

It'll be interesting to see how crazy it gets for the rest of Friday. More interesting will be how first-day Facebook investors feel in about six months. I suspect their excitement will be dramatically diminished.

Chris Nerney writes ITworld's Tech Business Today blog. Follow Chris on Twitter at @ChrisNerney.

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