Facebook And the IPO Saga

I have done almost a dozen post over it and tried to reveal the concept of IPO and what does indicates. One of the true indication of the IPO’s is that “It’s probably overpriced.” that has always been true since inception. Facebook IPO is another chapter in that series.

The objective of an IPO is meant to fund the company and reward its founders, and make money for the people who are handling the deal. If you’re an average investor, you’re not getting

the first shares. Think of it as if it was the starting line for a big road race, where there’s a huge crowd of runners standing by the starting line ready to go … and you are part of the huge back that is queued up about a quarter-mile deep.

Even if you have the wherewithal to win the race—or at least pass a lot of the runners ahead of you—it is the guys upfront who have been promised a fast, easy start.

If you cannot read between the lines and in most of the cases it holds true, putting your hard-earned money is never advisable, The Risk factors, objectives of the issue, Business overview is documented so well that the more buzz a new offering creates on the Street, the more individual investors get interested and excited and the easier it is for the guys behind these offerings to make money. refer to my last post IPO’s WHAT TO READ IN AN OFFER DOCUMENT ?

FB is a very good example of it. It has lost about $35 Billion in value since IPO as shares dip below $29 yesterday.

Primary market is a grey area across the globe lot of papers have been written over it like I tried to reveal and the area which can be worked upon PRIMARY MARKET – Do grading of IPO help?

Here is some reactions of public after buying the IPO :
Feeling the Pain :
“For the Love of god make these Facebook ipo pitches stop”

Before the IPO the excitement is too much:
“Good thing I’m wearing a diaper $FB”

Worth it ?
“FB is my relationship history whose photos I stalk where I was in Dec 2006 and number of Farmville goats”

Exactly what it was 🙂
” FB IPO is Kate & William’s wedding for business nerds”

Caveat emptor as always regarding IPOs it’s the market for the firm’s and to conclude this by quoting Warren Buffett It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).”

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