I think FB is great for the long term, obviously we can all see how much it sucked for an IPO day trade in hindsight. 50% sure good as any educated guess. Gann would love you.
A stock will rally from a lockup expiration if there is not much selling, and shorts are forced to cover. However, the problem is that insiders have increased selling when lockup expired.
Out at 19.12. Don't like this price action, probably gaps down tomorrow morning. I'll get back in later.
The SEC is considering eliminating the rule forbidding company executives from hyping their stock before they go public, after a string of disastrous high-profile IPOs like Facebook's. SEC chair Mary Schapiro sent a letter to Darrell Issa letting him know that her team was reviewing the so-called "quiet period" rule, after complaints that it had left small investors in the dark - the Wall Street Journal reports. Issa was a vocal critic of the Facebook IPO, saying it revealed "substantial flaws" in the process. He's advocated a number of reforms, including lifting the gag order, instituting safe harbors for pre-IPO statements, and even setting initial prices via public auction. Facebook's IPO drew eyebrows because underwriter Morgan Stanley analyzed the deal and warned select clients to stay away, warnings the general investing public didnât get. Schapiro's letter admitted that the underwriter's role in a deal does "raise potential conflict of interest. -Newser How do you get in that Morgan Stanley Club? Free Masons? Illuminati?
Think about it from the Wall Street point of view. Morgan Stanley is an investment bank, one of if not the best in the world, and has been since it was spun off from JP Morgan in the 30's. Their job was to sell the stock to the public of probably the most widely used thing on the internet aside from Google search. Did nobody take into account that the only way a company can get to rediculous P/E is to have phenomenal growth of PROFITS, not user base. Think Amazon and Ebay, their P/E ratios have been nothing short of retarded, why? Gigantic amounts of sustainted growth. Facebook has no growth. Facebook was priced at 100 times earnings. If you wanted to buy the company as a private enterprise you'd have to own the business as is for one hundred years to break even on the investment. And it isn't like Facebook could start charging for membership, nobody would use it. Given these facts I'd say Morgan Stanley did a hell of a job. The same way the salesman at the used car lot has you driving home in a gremlin, that you paid for as if it was a Cadillac, did a hell of a job. GRPN made at least some money, same with Zynga. Neither of those were priced at 100 P/E out of the gate either. You have tens of thousands of of stocks to choose from, keep looking.