Thread: A little confused about IPO's, and these huge returns...

Unless you have a minimum mid 8 figure portfolio with one of the IBs underwriting the IPO, you're nowhere near a big enough dog to get offered any shares before they hit the street. Focus on whether there's any upside to trying to get in on the stock early in the trading day, or wait a little bit and short/put it if you think it's overvalued and due for a correction after the initial hype wears off.

I still don't know why Facebook wants to IPO, if rumors are true they are sitting on plenty of cash.

Originially Mark wanted to keep away from IPO thinking that he wanted to focus more on the product than satisfying shareholders. But I think that lately he's been getting a lot of pressure from either his people or other people to do so, so he finally caved. That's what I heard...

Originally Posted by Forfend

I still don't know why Facebook wants to IPO, if rumors are true they are sitting on plenty of cash.

b/c they have over 500 investors now and they must start reporting to the SEC, as if they were a public company. might as well get cash out of the deal.

- chuck

Originally Posted by Vix'd

It seems too easy to buy $100,000 worth of an IPO, watch it go up 50%, sell all your shares the next day and walk away with a $50,000 profit in one day. This can't be how it works, can it?

artificial demand. in the case of grpn, i think they sold only 8% of the company so there just isn't much stock out there relative to demand.

but think of it from the company's POV - if the stock goes up 50% the first day, that's 50% the company itself missed out on when pricing the shares.

no one on a msg board "just pocketed $20k from GRPN" - like fusion said, you had to be mid-8 figures to get in on offering shares and, even then, you probably only got a token amount.


as for facebook, i think they did $4B revenue, maybe $2B profit, and you're looking at a $100B valuation. and how many more people can they sign up? revenue will surely get to $10-15B if they don't screw up but the stock will be priced to the max and it will trade sideways for a very long time.


this is one of the unintended consequences of SOX. it was designed to protect normal investors. however, companies figured out there was tons of private equity internationally and they now use that to get to a point where they are FULLY valued by the time they IPO. by the time average Joe gets it, he's not making money on the stock for 5-10 years, if ever.

- chuck

Originally Posted by carendt242

b/c they have over 500 investors now and they must start reporting to the SEC, as if they were a public company. might as well get cash out of the deal.

- chuck

As Chuck said, FCBK (I'm guessing that will be their symbol) will go public for the same reason that GOOG did.......exceeding the number of investors allowed by the SEC for a company to remain privately held.

If you have $100k just to dump in an IPO then I assume you can afford to lose all of it. Always look at it from that perspecitive. 99% of the people you see on forums talk about making money are full of BS. Either its not real money, or if they did happen to make $20k off a stock, they conveniently forgot to tell you about the $50k loss they had last year or last trade.

Trust me...been in the business for over 10 years as a fund manager and I have seen it all. Throwing in 100k on an IPO is a bad idea unless its less than 5% of your liquid worth. If it is, then go for it and see what you can get out of it. Most likely the Facebook IPO will flop anyway. Never look at a trade as what you can make...but better yet, what you can lose. I wouldn't try to go for the homerun either. A $100k investment can easily net a 15% return in a year if you find the right fund manager. I would much rather take a 15% return with minimized risk compared to a 50% return (or loss) in a single day.

^Amen to M6.

I'm going to go ahead and agree with M6 here. Pretty much every tech IPO we've seen here turned out to be a flop. The huge gains were artificial and usually caused people to loose their money as they were trying to play it up and go even higher. I don't see Facebook being the exception to the rule.