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Facebook IPO Draws Highest Ever Retail Demand

Small investor demand for Facebook has been higher than for any other IPO in history, according to experienced market participants and people close to the deal.

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AP
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With less than an hour to go before the first public trade of the social network’s shares Friday morning, individual investors had a strong chance of getting more than 20 percent of the stock in Facebook’s $18.4 billion public offering, according to one person close to the deal.

The decision on how large a slice to give retail investors was being hammered out overnight, according to several other people close to the proceedings, and was set at between 20 and 25 percent.

Up to now, the November 2010 General Motors IPO, in which individuals received 20 percent of the stock, had the highest-ever retail stock allocation, said people who were involved with that deal at the time. That deal raised a total of $18.1 billion.

In recent days, online brokerages like E*Trade and smaller underwriters who were involved with the deal were overwhelmed by retail demand, according to reports and people at those firms. The experience at the larger underwriters was no different, say other people involved with the process.

To wit: One JPMorgan client who sought a 20,000-share Facebook allocation and didn’t want to be named said he was told to expect 200.

A Facebook spokesman declined to comment.

Facebook priced at $38 per share Thursday, which was the operative price for much of the day leading up to the announcement. Facebook’s CEO Mark Zuckerberg rang the opening bell along with Nasdaq CEO Bob Greifeld.

Facebook began trading at 11:30 am ET on the Nasdaq, and opened at $42.05 per share on Friday.

-By CNBC's Kate Kelly and Kayla Tausche
@KateKellyCNBC and @KaylaTausche

*This post has been updated.