Facebook Inc. (FB)’s initial public offering has so far generated lower-than-expected demand from institutional investors who are concerned about the company’s growth prospects, people with knowledge of the matter said.
Some investors expressed reluctance after Facebook said on May 9 that advertising growth hasn’t kept pace with the increase in users, said the people, who asked not to be identified because the process is private. Facebook is also telling analysts that sales may not meet their most optimistic projections, two people said.
Facebook executives have another week to market the IPO, scheduled to price on May 17, and underwriters are stepping up efforts to drum up interest from large shareholders, one person said. Underscoring concerns that growth may taper for the world’s biggest social network, 79 percent of respondents in the Bloomberg Global Poll of 1,253 investors, analysts and traders who are Bloomberg subscribers said Facebook doesn’t deserve a valuation at $96 billion, the high end of its projected range.
Lackluster interest from institutional investors at this stage could compel the company to rely more on buying from retail investors, from whom demand remains robust, people said. The company could still elicit enough demand to sell shares at or above the high end of a projected range, people said.