Facebook priced its initial public offering at $38 per share, which is at the high end of the range it proposed on Tuesday. The price will raise about $16 billion and give the social network a valuation over $100 billion.

The company plans to list 421.2 million shares of its common stock on the Nasdaq on Friday under the symbol FB. Facebook is offering 180 million of its shares. The remainder of the shares come from existing stockholders — a number of whom decided Wednesday to sell a greater proportion of their shares. Additionally, underwriters have the option to purchase up to 63.18 million additional shares of Class A common stock to cover over-allotments, which they are expected to sell based on demand seen during Facebook’s roadshow. This would increase the total sale by about $2.4 billion.

The IPO will be largest ever for a technology company and the third largest overall in the U.S., behind Visa and General Motors.

Last month, the social network reported revenues of $1.058 billion for the first quarter of the calendar year — a 45 percent increase from the first quarter last year, but 6 percent less than the previous quarter. Facebook, which was founded in 2004, had $1 billion in net income on $3.71 billion in revenue in 2011. The company generates the majority of its revenue from advertising, with about 15 percent coming from its payments business. Facebook collects a 30 percent cut of revenues from digital and virtual goods purchased with its Credits currency.

Some investors wonder how the social network’s monetization efforts will perform on mobile devices, where it so far has shown a limited number of ads. However, since filing for an IPO in February, Facebook acquired three mobile companies, including popular photo-sharing app Instagram. On Tuesday, the company hired the team from Lightbox, a similar photo-sharing app for Android devices.

Other questions arose about the effectiveness of Facebook’s display advertising when General Motors said this week that it was re-evaluating its paid media efforts on the site after seeing little impact on sales. Other brands, including Ford, came to the defense of the social network and suggested GM might not have applied proper strategy to Facebook.

In its IPO prospectus, Facebook admits that its ad model is nascent. “We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads,” it says in the filing.

After starting off the week at an all-time low, Zynga’s stock is beginning to rise again while Facebook’s initial public offering approaches.

The stock closed today at $8.22 a share, down from its opening at $8.75 but still notably higher than where its price was at the beginning of the week. Since Monday, Zynga’s shares have opened above their closing point from the previous day. The stock could be improving as Facebook’s Friday IPO draws near. The social network will likely be valued at over $100 billion with a stock price between $34 and $38 a share.

Facebook recently revealed in an S-1 amendment that Zynga was responsible for 15 percent of its 2011 income. When Facebook’s February S-1 showed 12 percent of its income came from Zynga, the developer’s stock rocketed up to over $14 a share before starting to fall back to previous levels. If the social network’s IPO is as big a success as many believe it will be, Zynga’s stock will likely see an even more dramatic share price increase.

Zynga’s stock still hasn’t taken off like many investors hoped it would when it began trading in December; shares didn’t return to their original price until late January. The stock managed to stay above $10 for February and March, but began a significant slide in mid-April, especially after the company’s Q1 earnings call on April 26. Although the company reported record bookings, it also reported a net loss of $85.4 million and shares dropped from $9.50 to $8.52 the next day. Shares continued to drop over the past two weeks, hitting an all-time low of $7.45 last Friday.

This post originally appeared on our sister site, Inside Social Games.

Facebook will make an additional 83.8 million shares available in an initial public offering on Friday, according to an eighth amendment to its S-1 filing with the Securities and Exchange Commission.

Most of these shares are being sold by existing stockholders Accel Partners, Digital Sky Technologies, Goldman Sachs, Greylock Partners, Mail.ru Group Limited, Tiger Global Management and venture capitalist James Breyer. These entities and individuals likely decided to sell more shares after Facebook increased its price range for the IPO from between $28 and $35 to between $34 and $38.

Other additional shares will be sold by IPO underwriters, including Morgan Stanley and JP Morgan. According to today’s amendment, Facebook has granted its underwriters the right to purchase more 63 million additional shares of Class A common stock to cover over-allotments. This is sometimes called a “greenshoe” option. Previously, Facebook was offering only about 50 million shares for a greenshoe, but this increased today because the number of over-allotment shares is typically a percentage of the total number of shares being floated.

Facebook itself is still only offering 180 million shares, which will raise about $6.8 billion for the company at the high end of the range. The remaining shares being sold will come from founders, employees and investors. CEO Mark Zuckerberg will exercise stock options and sell 30.2 million shares worth over $1 billion before taxes. Zuckerberg was not among the investors who decided to increase the amount of shares they would sell in the offering.

Facebook’s IPO will likely value the company at over $100 billion. Executives are expected to set the final stock price on Thursday. According to TechCrunch, the company will hold an all-night Hackathon event before Zuckerberg rings the opening Nasdaq bell from the social network’s headquarters in Menlo Park, Calif., on Friday morning.

Facebook today increased the expected share price range for its initial public offering to $34 to $38 a share, according to an amendment to its S-1 filing with the Securities and Exchange Commission. On the high end, the new price range puts Facebook’s market cap over $100 billion.

Previously, the company set a range of $28 to $35, giving it a maximum valuation of $96 billion. Facebook’s initial price range was relatively low considering that company shares went for $44.10 on secondary exchange SharesPost in March. The increased price range suggests there has been significant demand for the stock as Facebook executives met with investors during its roadshow last week. Some reports had said that investors were concerned with how the social network would be able to monetize mobile usage and were showing less interest than expected. Now this does not seem likely to be the case. According to the S-1, underwriters will also sell an additional 50,612,302 shares of Class A common stock to cover over-allotments.

Facebook made another change to its S-1 today indicating that its acquisition of Instagram could be delayed. Previously, the company said the deal would close in the second quarter of 2012, but now it says the deal is expected to close sometime in 2012. This gives weight to reports last week that the Federal Trade Commission would be investigating the deal. An investigation does not necessarily imply wrongdoing, as the FTC regularly reviews acquisitions over $66 million. Facebook bought Instagram for $1 billion. According to the S-1, Facebook has agreed to pay Instagram a $200 million termination fee if for any reason the deal does not close.

Facebook executives are expected to present its IPO pitch to investors in Kansas City and Denver this week. The company is likely to set a final offering price on Thursday before floating the shares on Friday. Some reports say CEO Mark Zuckerberg will ring the Nasdaq opening bell remotely from Facebook’s offices in Menlo Park, Calif.

Facebook has completed the first week of its roadshow appearances ahead of an initial public offering that could value the company at up to $96 billion when it lists its shares on the Nasdaq next week.

Many analysts are bullish about the stock, with Sterne Agee initiating coverage at “buy” and Wedbush Securities assigning Facebook an “outperform” rating, according to the Wall Street Journal. The social network set its price range at $28 to $35 a share. The range was lower than some might have expected, considering that company shares went for $44.10 on secondary exchange SharesPost in March. Now CNBC reports that the company plans to increase that price range based on the demand it saw this week and Reuters reports that the IPO is already “oversubscribed” with eager investors. Then again, Bloomberg’s sources say that demand has been lower than expected.

Executives are expected to continue to meet with investors around the country next week before setting a final stock price on Thursday and floating the shares on Friday. Here is a recap of what happened since Facebook began its roadshow and what effect it might have on the IPO.

Last month, the social network reported revenues of $1.058 billion for the first quarter of the calendar year — a 45 percent increase from the first quarter last year, but 6 percent less than the previous quarter. This worries some investors, and Facebook responded with an amendment to its S-1 filing to confirm that the number of daily active users is currently outpacing the increase in number of ads Facebook shows in part because of increased mobile use and product decisions that reduced the number of ads on some pages. For instance, Timeline shows fewer ads than traditional profiles and pages did. The company says in the filing, “Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.”

Facebook also issued amendments to address its ongoing patent battle with Yahoo. The social network received a letter from Yahoo warning that technology used in Facebook’s Open Compute Project hardware may violate 16 Yahoo patents. So far, Yahoo has taken no further legal action against Facebook, possibly because of the controversy surrounding CEO Scott Thompson’s false academic credentials. Another Facebook S-1 amendment included new information about $796 million in restricted stock units that the company recently granted to employees.

Many investors continue to wonder how Facebook’s monetization efforts will perform on mobile devices, where it so far has shown an immaterial number of ads. The company’s current model for mobile advertising is also limited in that an advertiser cannot pay to reach whichever users they want. With Sponsored Stories, a user must already be connected to a brand — or have a friend that is — in order to see the brand’s content in their feed.

That said, Facebook this week revealed two potential new sources of revenue it is currently testing: paid apps and a way for users to pay to highlight their posts within friends’ News Feeds. These are both limited tests, which the company spokespeople downplayed. Although we’re skeptical about whether the highlight feature will ever expand to more users and if paid apps will be successful, the new App Center seems to be a good move to encourage developers to stay on the platform and get investors to make comparisons between Facebook and Apple.

There have been some ups and downs, with news of a potential FTC investigation into the Instagram acquisition, and some critiques against CEO Mark Zuckerberg for not showing up to some roadshow events and not dressing more professionally when he did. Most of this seems to be overplayed in the media and is not likely to have an actual effect on the company’s IPO.

In the next week, Facebook executives are scheduled to visit Chicago, Kansas City and Denver before two more days of meetings in Menlo Park, Calif., according to PrivCo. There is no word whether Zuckerberg will attend this portion of the roadshow. So far he made an appearance in New York City and in Menlo Park, but did not visit Boston with CFO David Ebersman and COO Sheryl Sandberg. Some have said this was for security reasons. Others believe it reflects Zuckerberg’s disinterest in the financial portion of running Facebook. That could turn off some investors, but it seems there are plenty of others looking to buy in their place.

Assuming the company does not delay the IPO for any reason, it will float its shares on Friday.

Facebook is currently testing a way for users to pay to promote their posts at the top of friends’ News Feeds, a spokesperson confirms to us.

The test, which is limited to a small percentage of users including some in New Zealand, places a “highlight” button next to Like and comment on a user’s Facebook posts. After clicking “highlight,” users will be taken through a payment flow. We’ve seen prices ranging from free to US$2, and users seem to be able to use PayPal, a credit card or Facebook Credits they have saved. The promoted post will appear at the top of friends’ News Feeds with the word “highlighted” below the post.

Although the social network constantly tests new features that do not become implemented more widely across the site, this particular feature is surprising for a number of reasons. Facebook has previously struggled with rumors that it would charge for its service, despite a note on its homepage that says, “It’s free and always will be.” Asking users to pay for friends to see their posts seems likely to fuel further speculation and hostility from some users. The company is also in the middle of its roadshow leading up to an initial public offering next week. As we noted when Facebook announced Wednesday it would begin a testing paid apps on its platform, it seems unusual for a company to implement potential new monetization strategies at this stage.

However, if tests show that users are interested in the feature, Facebook would be likely to expand its availability and highlighted posts could become a source of new revenue. The test is likely inspired by Tumblr, which in February began a highlighted posts feature that lets users pay $1 to make their posts more noticeable in readers’ dashboards. While this is an interesting approach for a startup that has previously never monetized, it seems odd that Facebook would try a similar test at this stage in the company’s development. The experiment reminds us of when in 2009 the company tested a way for users to give give each other Credits for content they shared in the feed — an idea that Facebook quickly scrapped without ever rolling out widely.

If highlighted posts did expand to more users, we can imagine people who have chosen to enable subscribers being interested in the feature. Though in its current state, users do not seem to get any data about the results of highlighting their posts, so it might be hard to determine its value. For example, a $2 cost to show a single post to a user’s 130 friends — the average according to Facebook’s statistics page in February — is a CPM of more than $15. Most users might not frame the cost in this way, and there may in fact be cases when a user would be willing to pay $2 to make sure that friends see a post. Perhaps a birth announcement, a post about looking for a roommate or a link for fundraising might qualify. Small business owners might also start to use the feature to promote their business this way rather than using pages and traditional ads, which are not guaranteed to show in News Feed.

Hypothetically, if Facebook could get every user in the U.S., Canada and Europe — where the company currently generates the bulk of its revenue — to highlight one post a year for the $2 price, it could bring in about $858 million in additional revenue. This is well above the $484 million it made from its payments business in the same region last year, according to a filing with the Securities and Exchange Commission.

Still, giving users the option to pay to ensure that friends see their posts might lead some users to question what happens to their posts they don’t highlight. It does not reflect well on Facebook’ algorithms if users have to pay to get their most important posts seen. It also seems out of character for the company to make this sort of blatant revenue grab after much of the company’s pre-IPO talk involved managing investors’ expectations for how the social network approaches monetization. For example, in Facebook’s IPO filing it says, “Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.” And CEO Mark Zuckerberg wrote in a personal letter to prospective investors, “These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”

Facebook re-introduced Sponsored Stories to News Feed in January, but these are content that brands and other advertisers pay to promote, not individual users. Last month a company spokesperson told us it would begin testing an option for page owners to more easily pay to promote their content to fans, but it did not suggest that users would be able to do the same for their own posts until a New Zealand blog reported the feature.

Below are images from Neowin.net whose writer, Owen Williams, has tested highlighted posts. If you have access to the feature, please share your experience with us in the comments.

Facebook today announced that it will begin supporting paid apps on its platform to be featured and sold in the new App Center also revealed today.

Paid apps are a new monetization model for Facebook. Previously, the social network primarily supported freemium applications that users add for free and then potentially pay for in-app items like virtual goods or digital media. For purchases within games, Facebook requires developers to use Credits, of which it takes a 30 percent fee. The company has said it may begin taking a cut of payments from non-game applications in the future, though it might adjust the percentage it collects.

Facebook offered few details about the program and emphasized that the majority of transactions will continue to occur within apps. The company did say that the program will involve “a simple-to-implement payment feature that lets people pay a flat fee to use an app on Facebook.com.” It did not share how many developers would be involved with the beta or mention the possibility of subscription-based models for applications. However, we believe it could be discussing this option with partners like Spotify, Netflix or the Washington Post.

For flat-fee apps, Facebook might see interest from some game and utilities developers. These are typically the type of applications that lead the paid charts on iOS and Android devices, however, most developers are finding that the freemium model is ultimately more lucrative. With the reach and promotion opportunities on Facebook, we could see a new class of applications emerge, but it is hard to think of a range of examples that would benefit from this type of model as opposed to using in-app transactions. This could potentially work for live streaming events, like concerts or sporting events, which social entertainment developer Milyoni has found users willing to pay for on Facebook.

Facebook downplayed the significance of paid applications today, telling us it expects the bulk of transactions to continue to come through in-app purchases. However, it is surprising to have this type of announcement occur while the company is on the road promoting its initial public offering. Today’s updated S-1 regulatory filing with the Securities and Exchange Commission does not include a mention about the potential opportunities or risks associated with this experiment. The amendment instead included notes about how the social network’s mobile growth has led the number of daily active users to outpace the number of ads it shows:

Based upon our experience in the second quarter of 2012 to date, the trend we saw in the first quarter of DAUs increasing more rapidly than the increase in number of ads delivered has continued. We believe this trend is driven in part by increased usage of Facebook on mobile devices where we have only recently begun showing an immaterial number of sponsored stories in News Feed, and in part due to certain pages having fewer ads per page as a result of product decisions.

Developers who want to apply for the paid app beta program can do so here.

iOS and Android Messenger app gets update - Facebook’s standalone mobile Messenger app got an update today so users can now see whether their messages were received and more quickly see the location from which a message was sent. Image via Techcrunch

Facebook Messenger for iPad, video chat for iPhone in development - 9to5Mac says a source provided the site with access to an upcoming Facebook Messenger app for iPad and a version of the iPhone app with video chat features.

Facebook introduces Open Rack - Facebook introduced a new open source server design Wednesday called Open Rack. Part of the company’s “Open Compute Project,” Open Rack is meant to increase efficiency in Facebook’s data centers, the entire design of which is open sourced so others can model after it or improve upon it.

Facebook joins GNI with unique status – Facebook has joined the Global Network Initiative as an observer, Fast Company reports. The GNI is a consortium of institutions that monitor Internet firms on issues of free speech and human rights. As an “observer,” the company does not have to submit to auditing. It is the first company to have this special status.

Facebook’s first buy rating – Facebook saw its first buy rating from Wedbush Securities Inc. this week, with a target price of $44. That’s well above the $28 to $35 range Facebook set earlier this week.

Like button is not protected speech – A federal judge in Virginia ruled this week that Liking something on Facebook was not tantamount to speech protected under the First Amendment.

FBI lobbying for Facebook backdoor – Wired reports that the FBI has been lobbying Facebook, as well as other companies like Yahoo and Google, to give them backdoor government access to their platforms for wiretapping.

Googles Ordr.in launches Timeline integration – Google Ventures’ Ordr.in became the first restaurant commerce app to integrate Facebook Open Graph. Users of the app can order from a restaurant and share their activity to Facebook timeline using the new actions “crave” and “eat.”

U.K. bouncers identifying patrons via Facebook – Bouncers in some U.K. bars are asking patrons for their smartphones to compare IDs to Facebook profiles in order to guard against fake IDs.

Roadwire wins Facebook Small Business Boost contest - Roadwire, an automotive aftermarket manufacturer and distributor based in Austin, Texas, won the Facebook Small Business Boost contest that rewarded companies that added the most new fans in a given period. Roadwire added over 125,000 fans in less than three months, and earned $10,000 in Facebook advertising as a prize.

Facebook today set the price range for its initial public offering at $28 to $35 per share, which would lead the company to raise between $5 billion and $6.3 billion, at a valuation up to $96 billion, according to an updated S-1 filing with the Securities and Exchange Commission.

This would make Facebook’s the largest IPO of any tech company. Google was valued at $23 billion went it went public in 2004. Facebook estimates net proceeds of about $5.6 billion, assuming an initial public offering price of $31.50 per share, –the midpoint of the price range — and after deducting underwriting discounts, commissions and estimated offering expenses.

Facebook says 180 million of the shares in its offering would come from the company itself. The remaining 157,415,352 shares being sold will come from founders, employees and investors. CEO Mark Zuckerberg will exercise stock options with respect to 60,000,000 shares of Class B common stock and will offer 30,200,000 of those shares as Class A common stock in the offering — worth about $1 billion before taxes.

According to Fortune, it is unusual that Facebook set such a wide range for its filing. Most prospective issuers usually only use a $3 spread, it says. Still, the price is lower than some might have expected considering Facebook shares went for $44.10 on secondary exchange SharesPost in March. The social network could still adjust its price before the actual offering based on demand it sees during the investor roadshow.

Facebook also released its retail roadshow video here. The company will begin its in-person roadshow next week, and without any delays, Facebook should begin trading on the Nasdaq under the symbol FB on May 18.

Yahoo files more patent claims against Facebook - Yahoo today filed two more advertising-related patent infringement claims against Facebook. Yahoo criticized the social network for purchasing patents specifically as means of retaliation against Yahoo. Facebook responded with the following statement, ”We remain puzzled by Yahoo’s erratic actions. We disagree with these latest claims and we will continue to defend ourselves vigorously.”

Instagram acquisition may delay IPO - Reuters reports that Facebook’s acquisition of Instagram and recent patent purchases may delay its IPO by about a week, pushing the initial public offering to later in May.

New Facebook for Windows Phone App - The new Facebook app for Windows phones includes features such as full thread messaging, the option to tag friends at locations, delete posts and comments, and ability to Like comments.

Facebook focuses on security - Facebook is testing a new product called Support Dashboard, which gives people who use Facebook more insight and visibility into what happens after they report content or other users on the site. From the Support Dashboard, users can see if their report has been reviewed by Facebook and receive an alert when a decision has been made about a report.