Facebook surges in grey trading

Facebook's value rose to $123bn in grey trading yesterday as it prepares for a $5bn float later this year.

The social networking giant's market cap soared in grey market trading - when shares are traded on an unofficial market prior to an IPO - run by financial spread betting firm IG Group, reports City AM.

IG Group ran similar markets prior to the official launch of other IPOs.

At the end of trading yesterday, its traders valued Facebook at $112bn.

A spokesperson for the group said its clients are bullish on Facebook's growth prospects, and expect a large take-up when the firm launches its IPO.

Although no target price has yet been announced for the offering, analysts expect Facebook could be valued at up to $100bn when it lists.

The date of the IPO has also not been announced but Facebook is expected to start trading in the next three to four months.

A number of fund managers have previously expressed reservations about participating in the IPO, arguing Facebook has been overvalued.

"The key is not overpaying for growth in the investments you make, and that is the danger of paying the multiples being touted around for Facebook," Polar Capital Global Technology fund manager Nick Evans said early last year.

US investor Jim Rogers echoed that sentiment earlier this week, telling CNBC Facebook is the kind of "very, very expensive" stock he typically shies away from.