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Facebook Could Not Have Picked A Worse Time For An IPO



May 18, 2012 – Comments (0) | RELATED TICKERS: GRPN , FB , GOOGL

This is the day when Facebook (NASDAQ:FB) will debut for trading on the open market. Facebook is the most highly anticipated initial public offering (IPO) since Google Inc (NASDAQ:GOOG) came public on August 19, 2004. Facebook stock is being priced at $38.00 a share by the lead underwriters. The stock is expected to trade higher once it opens for trading around 11:00 am EST. The company is expected to be valued at about $100 billion dollars.

While many investors are very excited about the huge internet IPO, it could not be going public at a worse time. The major stock indexes have been declining sharply lower since May 1, 2012. Many traders are eagerly awaiting Greece to depart from the European Union. Most of the European stock indexes remain under heavy pressure as the credit rating agencies downgrade European banks and Euro-zone countries on a daily basis. Asian stock markets have also been under heavy selling pressure lately as the markets continue to deflate and trade lower. None of these important factors make for an ideal environment for the Facebook IPO.

If FB stock would have come public in early April 2012 when Apple Inc (NASDAQ:AAPL) was running to new highs this stock would have probably traded over $100.00 a share, however, that is not the case today. Many of the internet IPO's this year have been flops. Highly anticipated stocks such as  Groupon Inc (NASDAQ:GRPN), Pandora Media Inc (NYSE:P), Zynga Inc (NASDAQ:ZNGA) and FriendFinder Networks Inc (NASDAQ:FFN) are already trading below their IPO prices. One stock that has been very volatile is LinkedIn Corporation (NYSE:LNKD). This stock is trading above its IPO price and remains a very popular stock at this time.

Many investors are now wondering if Facebook will be a good stock a year from now. That is certainly anyone's guess. One fact that we all know, the company is the largest social network in the world. Is this social networking stuff just a fad? I'm sure we all remember the social network MySpace. That company was bought by News Corp (NASDAQ:NWSA) for $580 million in 2006. Recently, News Corp sold MySpace for roughly $35 million taking a huge loss on the company. Now let's understand, it was Facebook that put MySpace basically out of the public's eye. Either way, it will be fun to see the euphoria in the public, however, most seasoned traders will sit back and watch the show. Until this stock can be charted there is really not much that I will be doing with the Facebook stock.  

Nicholas Santiago

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