By Olivia Oran and Alexei Oreskovic
NEW YORK/SAN FRANCISCO, May 15 (Reuters) - Facebook Inc increased the price range on its initial public offering an average of 14 percent to raise more than $12 billion, giving the world's No. 1 social network a valuation potentially exceeding $100 billion.
The company, which began in a Harvard dorm room by Mark Zuckerberg, raised the target range to between $34 and $38 per share in response to strong demand, from $28 to $35, according to a filing with the U.S. Securities and Exchange Commission on Tuesday.
That would value Facebook at roughly $93 billion to $104 billion, rivaling the market capitalization of Internet powerhouses such as Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.
The price increase indicates intense market demand, which means Facebook's shares are likely to see a big pop on their first day of trading on Nasdaq on Friday, analysts said.
"It's confounding but the evidence is that if companies raise the range they will pop more," said Josef Schuster, founder of Chicago-based financial services firm IPOX Schuster LLC. "It signals that there is such a strong demand that it will create a momentum for other investors who want to jump on."
In the biggest-ever IPO to emerge from Silicon Valley, Facebook will raise $12.1 billion based on the mid-point price of $36 and the 337.4 million shares on offer, or 12.3 percent of the company.
At this mid-point, Facebook would be valued at roughly 27 times its 2011 annual revenue, or 99 times earnings. When Google Inc went public in 2004 at a valuation of $23 billion, it was valued at 16 times trailing revenue and 218 times earnings. Apple, meanwhile, went public in 1980 at a valuation of 25 times revenue and 102 times earnings.
Wall Street had expected Facebook to increase its price range, with investors eager to get a slice of a strong consumer brand. The IPO roadshow began last week and has drawn crowds of investors from coast to coast.
Facebook plans to close the books on its IPO later on Tuesday, two days ahead of schedule, a source familiar with the deal told Reuters on Monday. It is scheduled to price its shares on Thursday and begin trading on Nasdaq on Friday.
The IPO is already "well oversubscribed," which is why the company will close its books earlier than anticipated, the source said.
Facebook's capital-raising target far outstrips other big Internet IPOs. Google raised just shy of $2 billion in 2004, while last year Groupon Inc tapped investors for $700 million and Zynga Inc raked in $1 billion.
The IPO comes amid concerns from some investors that Facebook has not yet figured out a way to make money from an increasing number of users who access the social network on mobile devices such as smartphones.
Company executives met with prospective investors in Chicago on Monday and were slated to travel to Kansas City, Missouri, and Denver, before returning to Facebook's Menlo Park, California, headquarters.
A host of Wall Street banks are underwriting Facebook's offering, with Morgan Stanley, JPMorgan and Goldman Sachs serving as leads. Facebook will trade on Nasdaq under the symbol FB.