Back in February, I opined about the then impending, Facebook IPO, and then the YELP IPO. Then in March, I briefly touched on the some what misleading headlines which normally accompany these IPO’s on their first day of trading on the exchange.
More details are known about the Facebook IPO including its expected price range of $28-35 (which is rather wide as far as IPO’s go). This range is actually below what was initially anticipated since transactions on the private market from back in April showed their shares trading at around $38-40.
Previously, I had mentioned that I would be sitting out this particular IPO since I had a feeling that once shares begin public trading, there is no way it will even open near the upper end ($35). The demand for this one is likely going to be somewhat on the crazier side compared to recent Internet related offerings. At the time, I figured there would be no way for regular investors like myself to get in on the initial offering except once it begins trading on the exchange…. thanks but no thanks.
With that said, E*TRADE was added as the 33rd underwriter for this IPO. As an E*TRADE customer, I have the opportunity to take part in this offering; I received that e-mail on Monday where they would be accepting conditional orders. As with all such offerings, actual allotment of shares depends on how the IPO is structured, how many shares E*TRADE themselves are provided, and the level of demand by E*TRADE investors. Clients who qualify, submit a conditional offer for the number of shares and maximum price they are willing to pay. There are no guarantees that investors will receive IPO shares.
This is about the only way I would participate in acquiring some Facebook (FB) shares as the rest of my feelings about this stock and the company remains unchanged from what I’ve written about before. However, it is absolutely futile to “fight the tape” in this market (AMZN for example continues to defy gravity; I guess Bezo’s being a former Wall Street IT programmer and later, hedge fund manager, must have something to do with it…) as I fully expect the hedge funds to push this thing up AND down to make money.If YELP could “soar 64%” on its first day of trading, imagine just how something like FB could do (it’s all about supply and demand – and temporary insanity tends to rule the roost). So if one can get in before this gets priced out on the public market, well then, why not. I’m looking at FB as doing something like LNKD (LinkedIn) where it was finally priced at $45 and ended up closing at over $94 on its first day of trading. One month later, the stock fell all the way to $63. Then one month after that, went all the way up to $109. Over the past 9 months, its been a rollercoaster, reaching a low of around $55 before moving all the way back up to its current $100-120 range. The ones who flipped their shares on the first day (back on May 19, 2011), made a decent return, but the payoff as usual is at around the 90 day mark (when some hold periods may expire). Regardless, someone rode it all the way up and down during these times, making a ton of money. Since the start of 2012, it has been on a tear (which I don’t expect to last long given its current 794 times multiple).
Out of full disclosure, I’m going in for between 100-500 shares at up to $40 per share on my initial conditional offer. The low/high end of $28-35 expected price range will be determined based on the conditional offers provided by prospective investors before public trading begins. Depending on demand, I may need to shift that limit offer to a higher range for a lower number of shares. If I’m lucky enough to actually be allocated shares, I have full intention of holding them for at least the full 30 days (E*TRADE does not mandate this but preferential treatment is given to those who do not quickly flip their shares). I may be inclined to hold them longer depending on how good of a citizen, the company is, as a publicly traded entity. We’ll see exactly what happens.
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