Yahoo! Finance to stream LIVE coverage of the Facebook IPO Friday starting at 10:30 am. WATCH IT LIVE HERE!
When Facebook (FB) goes public later this week, the next generation of ultra-rich 20-something techies will have been created.
"You are looking at the potential of scores, if not hundreds of millionaires," says Matthew Miller, editor for the Bloomberg Billionaires Index, a daily ranking of the wealthiest 20 people in the world. Miller's estimate is on the conservative end of the spectrum. In February, when the company announced its IPO, many put the number of people to rake in at least seven-figures at a thousand or more.
Of course, along with the newly minted millionaires will be a handful of billionaires, including the just-turned 28-year-old Facebook co-founder and CEO Mark Zuckerberg. According to the head-hunter Spencer Stuart, Zuckerberg is half the age of the average S&P 500 CEO and has logged more time at the helm than the typical leader.
The exact amount of each individual's net worth all depends upon where the stock initially prices and eventually trades. Shares of the social media giant are in such hot demand from investors that Facebook increased its target range to $34 to $38 a share from the earlier range of $28 to $35 a share in what has become the most anticipated initial public offering since Google in 2004.
Using a share price of $35, now on the lower end of the spectrum, Miller and his team estimate Zuckerberg will be worth a whopping $17.6 billion, which makes him the 35th richest person in the world on the Bloomberg Billionaire Index. That means Zuckerberg will be worth more than the GDP of some countries and will have amassed more wealth than Microsoft co-founder Paul Allen, Dell Inc. founder Michel Dell, Virgin founder Richard Branson and even Donald Trump. (Editor's Note: This interview was taped ahead of Facebook's move to raise its target IPO range.)
At #35 on the Bloomberg Index, Zuckerberg sits below Google founders Sergey Brin and Larry Page who are worth $18.5 and $18.7 billion, respectively. But if shares of Facebook pop well above $35, all bets are off.
"If you believe all the hype of what could happen to Facebook shares on the first day of trading you could really see Mark Zuckerberg worth north of $20 billion by the end of Friday afternoon," says Miller.
The possibility exists that some people who own enough Facebook shares could see their worth go up, or down, by a billion or two, almost in an instant.
Dustin Moskovitz, Zuckerberg's Harvard roommate and Facebook co-founder, will have a stake worth $4.7 billion, using the $35 price per share target set by Bloomberg.
Sean Parker, the former first president of Facebook and founder of Napster, will own a stake worth $2.4 billion.
Eduardo Saverin, the Facebook co-founder who recently made headlines for renouncing his U.S. citizenship (likely for tax purposes), will own a stake between $1.2 billion and $2.5 billion, depending on how much of the company he actually owns. Unlike the aforementioned Facebookers, his stake has not been publicly disclosed but, according to Miller, it is definitely less than 5%.
Sheryl Sandberg, Facebook's chief operating officer and one of the most successful women in the world, won't be a billionaire at the $35 price target. She has to wait for the stock to hit $37 a share or wait for some of her 13 million other restricted stock shares to vest, which the Bloomberg Billionaire Index does not count in its calculations. But it is not likely Sandberg will have to wait too long to hit the billionaire mark, especially with the new IPO target range between $34 and $38 a share.
There are of course other major investors slated to make a killing on the IPO, including Microsoft, Paypal co-founder Peter Theil, James Breyer and Accel Partners and LinkedIn's co-founder Reid Hoffman.
Even U2's Bono has a stake in the IPO. His investment firm Elevation Partners has poured at least $120 million into the company.
Facebook Wealth Effect: All in the Family?
Edward Zuckerberg, father of boy-genius and a dentist by trade, owns 2 million shares of the company, according to CNBC. He was an initial investor in the company.
Randi Zuckerberg, Zuckerberg's sister, was a Facebook employee until August 2011 when she left to launch her own tech start up. It is unclear how many shares of the company she owns, but she was entitled to stock in the company just like others in her similar position at Facebook.
Facebook's Wealth Effect: The Accidentally Wealthy
Like many tech "darlings" such as Google, Facebook did not have much money in the early years and paid its bills in Facebook stock. There are some people out there who could stand to make a fortune having never worked for the company full-time.
Take for example graffiti artist David Choe. You may remember his story from earlier this year when news of the IPO broke. In 2005, he was hired by then-president Sean Parker to paint murals to cover the walls of the original Facebook office. Instead of a $60,000 paycheck, Choe opted to be paid in Facebook stock worth the same value having little clue how much those shares would ultimately be worth. Today his shares are valued somewhere between $200 million and $500 million.
When Facebook goes public, Miller believes there will be more stories of people who essentially became a millionaire "overnight" for a service they provided the company. "There is a real potential for that to happen post this IPO," he says.
But wait, there is even more. Once Facebook shareholders cash in, there is a real potential to heat up an already warm Silicon Valley economy.
Movoto Real Estate, located in the Bay Area, predicts the IPO will also make a lot of "outsiders" very rich as the Facebook uber-wealthy shop for new homes and in turn drive up property values. The company predicts a $1 to $2 billion dollar increase in property values, or roughly 5% to 10% per home, in some of the trendiest areas of town.
In conducting its research, Movoto consulted an outside real estate expert Carole Rodini, president of Bombay Consulting, who says this IPO will have a more lasting effect on home prices than the Google IPO.
"What happened was from 2000 to 2005 we had this euphoric real estate market," said Bombay Consulting president Carole Rodini in a statement on Movoto's website. "Everybody wanted to get into the real estate business rather than owning real estate as a home."
"These people are wealthy; they have money," Rodini says. "They are not going to try to day trade real estate."
Stay tuned for more Facebook coverage from The Daily Ticker and check out our previous coverage below!
- Arts & Entertainment