Facebook Co-founder Renounces US Citizenship Ahead of IPO; New Tech Bubble in Works?
Facebook co-founder Eduardo Saverin to Renounce US Citizenship Ahead of Facebook IPO; Is Facebook Overvalued and a Harbinger of a Second Dot-Com Bubble?
INTERNET - According to a Bloomberg report last Friday, which was based on an IRS notice late in April that named people "who have chosen to expatriate," Facebook co-founder Eduardo Saverin is set to renounce his US Citizenship while he resides in Singapore, his "home base" for monitoring his investments in Asia and Brazil according to his spokesman.
Saverin was born in Brazil and made an initial investment of $1,000 in Facebook when Zuckerberg and him were students at Harvard. He was supposed to receive 34% of the company.
Instead, Saverin has claimed his ownership was diluted down to a fraction of a percent over time. This is when he began legal action. He also put his side of the story into a book which was what the movie The Social Network was based on.
A settlement was reached, and Saverin’s stake is currently about 4%, according to the website whoownsfacebook.com.
Some have said Facebook's IPO has been possibly oversubscribed, which could make Saverin - and others - even more money.
Others have wondered if a second Dot Com Crash is on the horizon. In a Market Day report at MSNBC, Mike Seiman, CEO of CPX Interactive, a digital advertising company said, “Yes, many elements point to a second bubble.” Many others, however, say that this is not possible.
According to regulatory filings, investors may pay as much as $13.6 billion for Facebook shares. This is quite a bit more than the $1.67 billion raised by Google with its IPO in 2004.
Saverin, now 30 years old, has joined a number of people who have given up U.S. citizenship ahead of a possible increase in tax rates. In total, a record number of people - 1,780 - gave up their U.S. passports last year. This is compared with 235 in 2008, according to government records.
Facebook is planning to offer their IPO on May 17, 2012, offering 337.4 million shares at $28 to $35 each. The shares will be listed on the Nasdaq Stock Market under the symbol FB.