Disclaimer: This is just a blog post, didn't bother to cite sources for the facts...I am not and investment advisor, Trading has risks and the risk is your own. Just and attempt at a blog post . These are just my opinions. I would love to hear other opinions too.

YUUUUPP!!! Facebook finally filed for their IPO last week and I bet, by now everyone and their momma knows about it. Let me start by getting the facts out of the way. The company is seeking to raise about 5 billion from this offering which will take place sometime this spring. Its share traded as high as 40 dollars a share in the secondary markets in the past week before the trading was halted in the secondary markets. Facebook is currently valued at somewhere around 75-100 billion or at least that’s the highest I have heard/read so far. Zuckerberg still owns about 28 percent stake in the company and he is about to transition into a dollar CEO pretty soon without any stock awards or bonuses. This will make him eligible to file for foodstamps as well as Earned Income Credit. Warren Buffet might roll over in his grave even before he is dead upon hearing that. So much for the Buffet Tax!!!

 

Flashing back to when Linkedin went public, the stock popped more than 50 percent on the day of its IPO. It was supposed to open at 45 dollars per share and it ended the day close to a 100 dollars a share. The humongous pop might be relative to the small float the company let out. After the hype faded, the stock pulled back for a couple of weeks all the way down to 60s and then the patient investors came in and bought some. A couple of months later their earnings hit as well as the IPO lockup expired which beat the stock all the way down to the 50s.

On the other hand, Zynga (ZNGA) let out a slightly higher float to avoid the flippers. The stock popped in the AM and gradually faded off the same day and dropped like a rock all the way down to 8s.

 

In the past couple of weeks both of these stocks have been gearing higher with an ever so bullish market as well the “oh so mighty” facebook hype. This begs the question, will FB (facebook ticker) behave the same way? My humble opinion, probably not. It will probably exceed and excel all expectations. The problem with LNKD was its earnings which put the valuation of the stock on the pricier side. ZNGA probably has a lot more trading to churn out because its too early to say anything with price targets ranging from 8s to 16s. But FB, being the core of all this hoopla, might just double or yet even triple its market cap on the same day itself. Why you might ask? That might even be a rhetorical question when you do, but hell, my friend's one week old son is on facebook. That should just about sum it up. Besides, not to state the obvious, it has strong earnings, growth rate and all that good stuff. Pessimists might say the company is peaking right about now and the insiders realized it and they are cashing out. That is a valid concern too, but hey the market trades on hype far more than it trades on fundamentals and the hype is just too big. The stock might not even have a buyable dip for a while and it might just even test the patience of the patient investors who usually stay on the sidelines for the hype to fade off.

 

Let me just reiterate how big the hype is. A woman got caught selling fake facebook stocks recently. She allegedly sold stocks to her contractor, some old lady, and a bunch of other people and scammed them for tens of thousands of dollars. If that does not clearly illustrate how big the hype is then I don't know what will.

 

A couple of stocks I have been trading lately with all this hype:

 

VRNG – makes facebook apps

ZNGA- the infamous farmville maker which sells fake goods for real dollars, accounts for 12 percent of facebook's revenue

SVVC- has about 4 million or something invested in facebook , the run up is jst baseless

GS-has a sizeable investment in facebook , valued facebook at around 45 billion about a year ago

RENN- chinese POS , facebook of China, got mentioned in facebook's S-1 filing

LNKD- mostly a sympathy play

WBMD- sympathy play

NFLX- waiting on bill or something for approval with facebook

There might be a lot more of these but, these are what I have come across recently.

 

The gameplan:

 

All these have had a massive runups in the past couple of days, with some directly relating to facebook and some just plain sympathy plays with just about nothing to do with facebook. In my opinion, the hype probably fades off for a couple of days because theres only so much you can talk about facebook on the media. Its gonna get old. The charts look kinda top heavy too and due for a pullback, Selling(shorting) opportunities when the markets pull back and getting into them on the pullbacks for a long for the ultimate sell on the day of the facebook IPO.

 

As far as FB goes I will probably flip or swing it cuz I am a trader. As far as an investment, If you can get in within the first couple of minutes on the day of the IPO,it should be good. Anything after that..well who knows, its all about guessing where the top is.

 

Or you could try to get into the Lockup issues, which I believe will really be hard to get into for an average investor.

 

OR just wait for the lockup to expire and buy that pullback.

 

Good Luck!!!

 

I think you hit the nail on the head when you said market trades much more on hype rather than on the basics. Being more of a value and passive investor, I consider it a pretty risky investment given that it's an expensive stock (given all the hype) to buy in the first place and also that the "product" that fb provides is, in my personal opinion, not sustainable (long term) relatively speaking. Given all the privacy concerns around facebook and other negative publicity news, I might as well use the money to buy some other stock with a lower risk. Furthermore, based on statistics, growth has slowed, so who knows if zuck is cashing out. or not. Think I've got a bit of personal prejudice... but such is life.

When facebook decides its initial public offering price in few months, it may already be out of avergage investors capacity. This is just a hype. Google had it, blackstone had it on 2008 and facebook has it now. well, google delivered and lot of people made good money. facebook might do it. they generate preety good ad revenues. LOng term investors, should buy it on when it forms a support and bounces off from that ......as long as uptrend exists, ride it. Trading it for short term is different and dont want to fget in there either. LOng-term investors should also focus on price actions. If its making higher lows and higher highs, buy at higher lows. Its simple......dont buy the hype...buy the price...buy the uptrend.
As Buffet said once, dont invest on something u dont understand. If facebook confuses u, leave it. There are a lot of other stocks u can make money on.

 Hey guys, nice reading your thoughts..What's your "updated" thoughts on fb? Lets see what happens to FB in 10 years from now..if you wish, we can visit this thread every 6 months or so and provide an updated thought. Everyone invited. You can provide your dui paisa or char paisa, it's not the point, but do provide your thoughts....guessing game. My current view..FB is going to be a major player in the online advertising world. Not only that, it will also compete directly wilth Amazon, with social sharing or "selling". You can already send gifts to each other...So many brands avaialble...net flix star bucks..etc etc..why not? Everyone's connected to each other 1 way or another..how about sell these products and services all over the world geographically..have you seen facebook "groups" ? How effective they are...I'm starting to see more and more "neighborhood yard sale" facebook groups. Not only that..there are groups for sewing, electricians, commedians, NFL fans, lawyers, doctors..so many to list..It's groowing.. Poiint is..people are shifting..now realizing to make better use of facebook..and facebook also realized that they need to engage their users by providing these free but awesome service that neither amazon or google can provide today!  Anyway, that's my very optimistic view. Simply stated, I think we'll see "Nepalese using facebook in Nepal will see local advertisments" and make money everywhere.  May be I'm wrong but I'll check back in 2 years to see if they do it or not1! And the number of users that facebook has is their biggest moat! They have all the data in the world that ever existed before.. I think..at least most of the current generation. They know what all these people do in a daily life..they'll sooner or later figure out a grand-recurring way to make all those extra money. I wonder how much facebook spends on advertising itself when everyone advertizes themselves to find them on facebook! Facebook may start charging them money for using their logo on their advertisment..who knows..