The Facebook IPO “is a continuation of this small mini-surge they are having right now” in the valley’s economy, said Stephen Levy, director of the Middle for Continuing Study of the Los angeles Economy. Unlike the dot.com boom and bust, Levy said, fast-growing social networking companies such as Facebook, Zynga and LinkedIn “are actual companies, plenty of of them with millions of customers.”
Even as Facebook begins the process — through a securities filing widely expected Wednesday — of offering its stock to the public, the wealth being created by the company is already rippling through the local economy, and specialists say the IPO will buoy the valley even more in future years. Anticipation of the largest IPO ever for an Web company has actual estate agents seeing a note of urgency in the local market, Wall Street funds managers moving in for a piece of the action, and even state budget analysts factoring in a “Facebook effect” that could top $1 billion.
Wealth managers working with Facebook employees say the IPO could fundamentally mint 500 to,000 new millionaires — perhaps as much as one-third of the company — with plenty of engineers who joined Facebook in its first few years in line to own $10 million or more in stock. Zuckerberg, who is thought to own one-quarter of the company, could finish up worth well over $20 billion.
Although some reports late Tuesday suggested that the IPO could be as small as half the expected $10 billion, Realtors say the excitement around Facebook is already sparking the long moribund housing market. Potential sellers require to know whether they ought to sell now or wait, and buyers are fervently pushing their agents to get in to the Peninsula housing market before the IPO, anticipating rising prices as the newly rich compete for the hottest neighborhoods from San Francisco to Palo Alto.
Actual estate boom
The IPO could value the company at as much as $100 billion. Although an actual estate boom is far from guaranteed — some agents think the boost to the market will be limited & will trickle out over time as employees gradually gain the right to sell their stock — high-end mortgage bankers are staffing up, , expecting business to surge.
“What they are seeing is the chance of a huge IPO is making a actual sense of urgency in our market, both for buyers & for sellers,” said Omar Kinaan, of Re/Max Matchless Properties in Menlo Park.
Sniffing a huge payday, Wall Street wealth management firms are opening new offices or expanding in the Bay Area to woo not only Facebook engineers, but also employees of LinkedIn, Zynga & other startups that have gone public. & with lots of of Facebook’s engineers & executives working through an extensive interview method to hire the firms that will manage their new wealth, smaller, local wealth management firms are in the fight for new clients, .
But however successful Facebook’s IPO becomes, don’t expect a replay of the financial promiscuity of the 1998-2001 boom, say wealth managers & actual estate agents working the social network’s new millionaires. Like Zuckerberg, who has long driven a well-used Acura & until recently lived in an inconspicuous rented house a few hundred yards from his then-Palo Alto office, the Facebook fortunati are likely to be more savvy, & less showy, with their wealth than the Net boomers of the 1990s.
While news reports have featured rumors of Facebook employees planning to spend their new riches on things like archeological journeys to the South American rain forest or purchasing flashy cars, lots of Facebookers appear to have more grounded designs.