Facebook maybe (NYSE:FB) maybe (Nasdaq:FB) looks like it will go public in May. This will be the biggest internet offering yet. OMG does that mean the biggest Wall Street Fees ever. Well given an anticipated $5 Billion offering with a 1.1% fee yeah the fee is gonna be huge. Given that we have arrived at the end of March it comes as no surprise the go day will be some time in May. Probably early May as the market will not want to have the really big deal come down around Memorial Day. Can you imagine getting some Facebook shares as a Mother’s day present?
Facebook does not seem to know about sell in May and go away. Facebook seems to forget that the six month lockup would expire in late Oct. If the stock has taken a dive, creating more selling pressure in the last two months is not wise. While underwriters insist interest and demand for Facebook is high what they cannot ascertain is how the market will pay for the shares. Will investors use unallocated cash reserves or will they trim positions in other technology stocks to make way for the new kid. As the inevitable flipping occurs the johnny come lately types will try to load up and need to finance the purchase. So maybe no definitely more selling especially from the smaller retail accounts.
So who is ripe for selling. Apple (NASDAQ: AAPL) has been in nose bleed country for a long time. Yahoo (NASDAQ: YHOO) probably not. Disenchanted investors have already bailed. You can just see the trim that may be called a rotation. Then again Facebook will become included in a lot of index funds and those portfolios that mimic them. But once that demand is covered money flow will taper off.
In the meantime buckle up.
George Gutowski writes from a caveat emptor perspective.
- Facebook stops secondary trading to prepare for May IPO (theglobeandmail.com)
- Facebook Admits Yahoo! Problem In Filing (247wallst.com)
- Facebook Strikes Back (yhoo, Fb) (businessinsider.com)