Social-networking site priced at $38 a share, as eager investors look forward to third-biggest offering in US history.

Facebook, the world’s biggest social-networking site, is set to raise $16bn for itself in its highly anticipated initial public offering (IPO) on Friday.

The social networking site has said that 421 million shares of common stock will be offered at $38 in the IPO, valuing the company at $104bn and making it the third-biggest public offering in US history.

Facebook itself is selling 180 million shares and holders of previous shares are selling 241 million.

From a dorm room in Harvard to swank headquarters in Silicon Valley, Facebook – now the world’s second-most-visited website – has grown rapidly since its founding in 2004 by Mark Zuckerberg.

A number of internet companies have launched IPOs over the past year, including Yelp, Groupon, Zynga, Pandora, Renren, and LinkedIn.

But the size of the Facebook offering – which will trade on the NASDAQ stock exchange – dwarfs those of its peers.

Facebook priced its offering at $38 a share on Thursday, implying a valuation of about $104bn for the company – about the same size as blue-chip behemoths such as PepsiCo, Visa, and McDonald’s, and far bigger than computer companies Dell and Hewlett-Packard.

The stock price could be even higher when shares begin trading under the FB symbol on the Nasdaq at 15:00GMT (11am EST) on Friday.

Apple co-founder Steve Wozniak recently added to the hype, saying that he planned to buy Facebook stock, no matter how high the price.

Overvalued?

Some analysts raise concerns, however, that Facebook may be overvalued.

“This is much more a spectacle, a media event and a cultural moment than it is an IPO,” Max Wolff, an analyst at GreenCrest Capital, told the Reuters news agency. “This is not a game of models and fundamentals at this point.”

Most of Facebook’s revenue currently comes from advertising, though investors hope that the company may find other ways of making money from its 900 million users.

In 2011, Facebook made $4.34 per user in advertising – which is higher than in previous years, but nowhere near the $30 per user per year that Google makes.

On Tuesday, General Motors announced that it planned to stop advertising on the website, claiming the $10m it had spent on ads had been ineffective.

Privacy concerns

The IPO is also calling attention to Facebook’s privacy policies. The website has drawn criticism for its sometimes opaque and frequently shifting policies regarding users’ data.

Inside Story Americas:

Is your personal data up for sale?

In 2010, the Wall Street Journal found that some applications on the site were transmitting user IDs to advertising companies – enabling them to look up users’ real names, regardless of their privacy settings. And since last year, Facebook has been using facial recognition technology to allow users to automatically tag others in uploaded pictures.

“The story from day one for Facebook has been trying to figure out how to monetise the value of the users while showing some respect for privacy,” Marc Rotenberg, executive director of the Electronic Privacy Information Centre, told Al Jazeera.

“Given the choice between extracting more commercial value or respecting the privacy settings of users, Facebook takes option one.”

A poll recently conducted by Associated Press and CNBC found that just 13 per cent of US adults trust Facebook “completely” or “a lot” to keep their information private.

“One of the things we’ll end up seeing this week is the extent to which investors believe that Facebook will be able to successfully manage privacy issues going forward,” said Rotenberg.

Has Facebook prioritised commercial value over the privacy of users? Weigh in on the debate below.