Facebook successfully had its IPO Today in NASDAQ after few years of planning, millions and millions f user is increasing YoY, but the one and only question today about the IPO, is this a hype or a good investment IPO?
There are 2 types of person willing to BUY on this stock:
1. Dumb users who are hyped and using FB as a Daily social networking site. Which dont know much on Stock Valuation.
2. Hedge Fund Managers who know how to control stocks and have long term outlook on its income.
But hey, I am the 3rd type of person NOT willing to Buy this stock for a lots of reason:
1. Original IPO price is at 36 USD per share, in an overnight meeting, stock price was increased to 38 a piece. Boosting them extra Billions overnight.
2. FB needs to earn 1Billion Dollars a year, to make its 18Billion IPO value worth it. Assuming 18 P/E is a good valuation ratio.
3. Looking at todays trading, it even rarely got above 38 USD, When it went to almost 43 a piece, sellers seems to sell down even to the last 38.00 tick.
4. IPO day reflects the valuation of a stock, and todays trading shows it doesnt even go high.
5. The issuers of FB (Morgan Stanley and other institutions) are controlling the 1st day trading to hold aboove 38 mark, as it is their job to make sure it doesnt fall below by using Oversubscription powers/money, using Billions of Dollars to maintain the price, the question is, until when can they do it?
Many reasons NOT to buy, but many reasons to USE Facebook. For me, until FB shows clear direction how they can earn the 1B a year, until then that I will think twice buying this stock.
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