Swarm of investors crave 'more shares than Facebook is selling' Facebook's IPO is already oversubscribed with too many investors eyeing up more shares than those available, according to a well-placed source. The rumour emerged as the Nasdaq said it expects a jump in the number of companies going public on the coattails of the social network's market buzz. A mole whispered to Reuters that …
I get people signing up for Facebook, whatever its shortcomings. I even get that once the stock is public there are enough fools out there willing to part with their money that Zuckerman stands to profit as much as any snake oil salesman before him. But the investors who are in on IPO offers are supposed to be smarter than that. We really don't need to evaporate another billion or three from a stagnant economy.
I can't see people making much money out of this. The anticipation means the share price will be right at the top of its range. It might be better to wait for the inevitable crash in price when the expected gravy train doesn't leave the station. Unless they buy Sony...
The only thing that bothers me at all is the thought that some muppet running my pension fund is going to be buying in to it in a big way. Anyone remember the late 90s?
"Facebook's IPO is already oversubscribed with too many investors eyeing up more shares than those available, according to a well-placed source."
Not according to Bloomberg, in fact there is a concern that very few institutional investors have shown any interest, and most brokers are recommending that people stay away from these.
Bloomberg even reported a survey on this Facebook IPO today:
1. "Do you think these are over priced?" = 79%
2. "Do you thing these are valued correctly?" = 7%
3. "Do you think these are under valued?" = 3%
Facebook's IPO rate the value of shares at 99 time turnover!
With Apple, Amazon and Google at valued at around 3 times turnover, who would be daft enough to buy these?
People want the shares simply because there's a demand. The plan being to buy what you can then sell quick (stagging) for a profit. Since FB is such a massive company, those traders who need a "balanced portfolio" will be forced to hold some FB stock, just to maintain the balance - irrespective of how many veiled profit warnings FB announced this morning.
Now, the problem is that if there are more announcements (FB said they don't make as much from mobile users - and their proportion is growing) or if the markets decide that FB isn't the golden child they thought it was a year or two back, then all the fizz goes out of the proposition and those left holding shares at the IPO price would have to take a loss if they sold them.
Personally, I don't give a rat's arse either way. They say that the only way to make a million quid on the stock market is to start with 2 million. And given the way it's going these days, it's no longer the sure thing it was in the 80s (when you literally couldn't get hold of a broker on floatation day ... grrrrr).
As it is, the history of internet stocks shows that they all go through an initial boom, followed by a decline into nothingness. The only question is was FB's boom last year, before they floated?.
If I could get in on the IPO, I would, but only the real IPO.
I think most people who get actual IPO prices will be flipping the stock before it has a chance to settle into its eventual price.
Most of us will only get access to the stock after its been flipped a couple times; at that point it may not be worth buying into.
Of course the IPO will be at the very least fully-subscribed. That is why you have an underwriter. They are in hock for any unsold shares. With all the 'likes' in Facebook world then you can be sure that the issue will be oversubscribed.
HOWEVER
Any profits from the IPO to be made after the issue is placed will come to the speculators and only the speculators. After a few days the share price will probably drop to below that if the placement.
The short sellers will reap their rewards and the average investor will find themselves stuck with a lemon. Just look what happened to Groupon.
Note, this is not investment advice. I'm not truing to buy Facebook shares. I don't even have a Facebook account and wouldn't have one even if I was paid to do so. I'm not on Twatter either.
The last tech stock I bought was RedHat. I still hold those shares. I bought Apple at $24.50 and still hold them.
Anon because I value my privacy.
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