Facebook’s IPO has set new records for wealth hyperbole.

It’s  the “best investment ever!” It’s the biggest liquidity event ever! It’s about to unleash a new wealth wave in America! It’s a boon to wealth managers and Palo Alto realtors. It’s going to solve California’s budget problems, help fix our education system and feed the poor in Africa.

But the most widely repeated superlative about the Facebook IPO is that it will create “1,000 overnight millionaires.”

This is impossible to know, of course. But the phrase “1,000 millionaires” appears to have magical – if not factual — significance in Silicon Valley.

Tech IPO watchers might recall Google’s IPO in 2004. Press reports at the time said the IPO “created more than 1,000 paper millionaires,” including a chef and a masseuse. That statistic was often attributed to “estimates,” though it was never clear where those estimates came from.

With Facebook, the “1,000 millionaire” claim first showed up in a Reuters article in December. Reuters partly attributes the number to a former in-house recruiter for Facebook who says “there will be thousands of millionaires.” The thousand claim has been picked up around the world and used as gospel in many recent reports about the IPO.

If the 1,000 number is true, then every one of the company’s 700 employees as of the end of 2008, as well as hundreds of other employees and investors, have shares worth at least $1 million or more.

Reuters concedes that there is no precise data on how many shares are owned by how many employees. It notes that most of the gains will go to the co-founders and the big venture-capital investors.  Reuters said that in 2009, an engineer with 15 years experience hired by Facebook could get options to buy 65,000 shares at $6 a share. After the 5-1 stock split in 2010, those shares would be worth $12 million at the expected valuation of $40 a share.

That was 2009, of course. And it was for a 15-year engineer. Press reports say Facebook has become far more stingy with stock in recent years. Managers hired last year were getting as little as 2,000 shares – giving them paper wealth of a measly $80,000.

What’s more, many of the paper millionaires won’t be able to do anything with that paper wealth until the middle of next year, when they can actually sell the stock. Until then, it’s just paper. And Facebook’s share price may or may not be worth $40 by the middle of 2013 (ask the Groupon guys).

Facebook will no doubt create a large amount of wealth for a single company. Employee-wise, it’s a small company. And its IPO is far from a “wave of wealth.” Even if it creates 3,000 new millionaires, those new millionaires would represent  less than 0.5% of the millionaires in California alone.

More like a splash than a “wave.”

How many millionaires do you think Facebook will create?

wsj