May 20, 2012
Weekly Market Outlook
By Keith Schneider
The long awaited Facebook IPO hit the market with a resounding thud. Unlike Google’s IPO, which jumped over 20% on its first day out and then proceeded to run up another 500%, Facebook barely held on to its offering price. The huge offering raised about 20 billion compared to Google’s paltry 2 Billion in a Dutch auction. The anticipated Facebook pop turned into a huge sucking sound as the hyped IPO drew the lifeblood out of the market.
While we are on a contrast and compare, the 421 million shares issued by Facebook on Friday (not counting over allotment) is in excess of 20 times the amount of shares initially floated by Google (20 million). It seems to me that supply and demand will eventually trump hype and with 400 million shares floating around there is plenty of supply. Not even the fact that GM pulled its ads from Facebook could deter or derail the IPO. Congratulations to the underwriters for pulling this one off and shoveling as many shares as they could out to the public.
Another curiosity is that even though Facebook has been listed by NASDQ, its symbol is FB, which means the normal naming convention has been thrown away. I am not clear as to why Facebook did not get a 4 letter word for its symbol, but it would be well deserved.
Most US Market Indexes have given up all of their gains for 2012 and are half a league from going negative, but we are deeply oversold and ready for at least a good bounce. However, there are big differences from what we had in March. To see them check out this week’s video.
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