The bungled initial public offering (IPO) for Facebook (Nasdaq:FB) was a real eye-opener for any company looking to go public.
Facebook's shares famously plunged soon after they started trading, in large part because the $16 billion offering was so large that it created a great deal of investor confusion as share allocations were misdirected.
Lesson learned. Twitter's imminent IPO will be for just $1 billion, leaving most of the company still in private hands. Look for Twitter to slowly offer more shares in various secondary offerings, but the initial scarcity factor is going to make huge instant profits for some investors.
If you can get a piece of this deal, buy it. But if you plan on buying shares only after they have started trading, you'll be making a big mistake. The relatively few shares means that shares are likely to be wildly overvalued -- at least at the start.
The drama of the Fiscal Cliff and the recent sequestration circus, plus the trials and tribulations of these four countries (which have run up huge deficits) have been well documented and known for quite some time. What is more important, in my opinion, is not the size of the debt which is staggering, but rather what is happening in the market and the market's perception of current events.
Market perception trumps everything else out there. Market perception trumps market fundamentals every time. Market perception is the one card that the government cannot control. It is the card that can potentially give the individual trader an edge.
A new term was introduced into the financial lexicon recently, to get 'Zucked'. The term was coined by investors in the Facebook (FB) IPO. Participants in the IPO have brought legal action against the company stating they were misled. The U.S. Senate Banking Committee has vowed to investigate assertions by investors they were hoodwinked. The stock is down over 27% since the IPO.
There have been several articles written in regard to these developments so I won't rehash the details. Suffice it to say, copious amounts of Facebook shares were sold at the high end of the price range. This maximized the windfall for CEO Mark Zuckerberg and other insiders and fashioned a far-fetched valuation for the company. Nevertheless, Facebook devotees argue that the company will eventually validate its sky-high valuation by leveraging its enormous user base and colossal amount of data collected. Continue reading "Caveat Emptor: Facebook Shareholders May Get 'Zucked'"→
Clearly, Facebook's (FB) $38 IPO was a bust (because the price dropped). So, the "market" took matters into its own hands. First, it tossed out the Morgan Stanley (MS), Goldman Sachs (GS) JPMorgan Chase (JPM) triumvirate's hype, dismissed Nasdaq's day-1 blunders and ignored investors' cries of "Foul!" Then, it focused on the real Facebook: A large, unique company with broad market appeal, a global brand name, and a potentially bright future.
(AP:NEW YORK) After all the hype, Facebook's first day as a public company ended where it began. Its stock closed at $38.23, up 23 cents, after pricing Thursday night at $38 per share.
After an anxiety-filled half-hour delay, its stock began trading on the Nasdaq Stock Market for the first time as investors were finally able to put a dollar value on the company that turned online social networking into a global cultural phenomenon.