Liking Facebook’s IPO Could Be Problematic For Retail Investors: The buzz over Facebook’s forthcoming IPO has been propelled at least in part by retail investors hoping for a piece of the social media giant’s predicted $75 billion to $100 billion valuation.
But when the company’s stock eventually hits trading floors, Facebook fans who want to get in on the company’s initial public offering are likely to feel as left out as the Winklevoss twins.
Google’s 2004 IPO was conducted via a complicated auction process intended to level the playing field between big trading firms and the little guys. Absent such an arrangement, the advantage tends to go to the players with the most trading volume and money.
By the time your average online brokerage customer can get his or her hands on a stock like Facebook, it’s probably going to already be on an upward trajectory. And those investors hoping to buy on a dip should think twice.
Last year’s spate of tech IPOs saw the stock of companies such as LinkedIn and Zynga put on an initial bounce before stabilizing. However, the hype surrounding Facebook’s IPO has been building for so long that the stock price could stay elevated for longer than other recently debuted tech stocks, analysts say. Continue Reading…