Just read today’s NY Post story “Zuckers”. http://www.nypost.com/p/news/national/zuck_laughin_in_their_faces_YuKorcZA7fIl8DKPLksIhK
Honestly, the IPO did what it should do. How many times have I heard “it’s not fair that only insiders get the shares at such a low price before the huge pop when it IPOs.”? Or some such statements. This one didn’t pop 50% or 100%. That’s actually a good thing for the retail investor. The same ones who constantly complain that only the “big boys” on Wall Street make any money. Now you can follow the stock and decide on a good entry point if you are so inclined. Or were able to buy on the day of IPO at basically the same price.
The idea is you are buying the IPO stock to INVEST in the company. Do you think Facebook execs or bankers wanted a bunch of day traders scalping the stock all day? The point of an IPO is to generate cash for the company. Not you pal. So when it opens up 50%, that is money the company left on the table. And a poorly priced IPO. This is not 1998-1999. We don’t want that tech IPO bubble.
Should FB have left it at $34? Probably. But they looked at the interest and raised the price based on that. You can look for all sorts of nefarious, greedy banker (or Zuckerberg) motives but the fact is – that’s what you do. That’s your job as a banker working for the company. Get the best price for the company.
And the main street investors who are getting “cheated”? I’m sorry but comments like…
Retired nurse Teresa Ryan, who lives in Tudor City, bought 4,920 shares at $40.50, noting she made a killing on Apple stock. “I’m very psychic when it comes to stocks, I really am,” said Ryan. “I have no retirement, I have no pension, so I try to make money on the market.”
Queens chauffeur Thomas Gardner, whose home was just foreclosed on, could only afford $89 for two shares, which he hoped would eventually send his 9/11-born son to St. John’s University. “This is a good start,” Thomas said, beaming as he came out of a Midtown Charles Schwab office. “Everybody is hoping for something, so I’m jumping on this wagon. I have a good feeling.”
…are indicative of the hype built up by the media, which was off the charts. I mean seriously. You cannot blame Wall Street bankers or Facebook for the non-stop 24/7 coverage not only by the financial news stations (looking at you CNBC) but also just the normal news. Heard comments on the news like ” I wanted to sell it this morning and make enough to buy a car.” Umm. Yeah.
Will the same bankers have to prop the price up like it seems they did at day’s end Friday? Perhaps. That’s also their job. But to be fair to FB and the bankers, this was a crap time to come out to market. And everyone hoping the Facebook IPO would cure all the market woes were sniffing glue.
I’m willing to bet it goes down but that it will recover and go up from it’s IPO price. In fact, I did bet that. I bought 100 little shares for my 401k. At $38.25. Didn’t get the IPO price, but close enough. Do I think it might go down a few points? Sure. Do I think it will go to $20? No. But I was willing to chance the 100 shares and let it sit in my 401k. Not in my trading account. And if it goes down under $30 – would probably add.
If you believe in the company’s ability to grow and be worth more, buy the stock on the day of the IPO (when it reacts like this and not +50%) and let it sit there and grow and not worry about it’s daily price movements. You are an investor.
But if your sole intention is to flip shares for easy cash, and the price movement doesn’t go your way, that’s on you. That’s like blaming the dice roller you follow on at the craps table when you put all your chips on his/her rolls when he/she rolls snake eyes. Dude – you’re not only not rolling, you didn’t even get to blow on the dice. So you are gambling. Pure and simple. Quite your whining, take your lumps and walk away.
