Facebook (FB) started trading today with much anticipation. Unfortunately the common place advice doomed the IPO.
The IPO was priced at $38. One of the first opening indications was $45 on 18 million shares. The stock was set to open at 11:00 am ET. The opening was repeatedly delayed and opening price indication kept on falling.
The common advice was to put in for 50,000 shares if an investor wanted 2,000 shares. Investors who heeded such advice got more shares than they wanted. As the opening indication was lower than bulls expected, investors simply wanted to flip. Buy orders were not there to match sell orders.
Even before the open of Facebook IPO, aggressive selling was seen in Facebook sympathy plays, notably in GSVC and SVVC, two funds that own Facebook shares. There was selling pressure in other Facebook sympathy plays such as ZNGA, GRPN, RENN, LNKD, and YOKU.
After Facebook stock opened and started falling, aggressive selling was seen in the above named sympathy plays.
Facebook stock touched its IPO price of $38. As is customary, underwriters appeared to have stepped in at $38 and as of this writing the syndicate bid has held.
As the situation unfolded, long before the Facebook opening this morning, I recommended to my subscribers to cancel orders to buy Facebook in the open market. I have recommended to those who received Facebook in the IPO to put tight stop loss orders right below the…Read more at Forbes