
Facebook IPO To Raise $5B, Filing Wednesday, Morgan Stanley In Lead - brd
http://techcrunch.com/2012/01/31/reuters-facebook-ipo-to-raise-5b-filing-wednesday-morgan-stanley-in-lead/
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r00fus
Same formula as ZNGA (and initially, GOOG). I think this strategy is wise, but
"projected market cap" is a bullshit term at 10% openly traded.

My pessimistic take is that, like ZNGA, the wind is no longer at Facebook's
back but they have no choice but to go IPO before it gets worse.

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avar
10% also seems even smaller when you take into account all the stock market
related regulations they'll have to adhere to because of this.

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socialist_coder
To everyone asking "how do i buy this stock at IPO?"- please think long and
hard about this. Do you really want to buy on day 1 when the scam underwriters
on Wall Street have already sold the stock to their institutional investors at
a 10-20% profit? That profit is coming from you, the pig investors who will
buy at day 1, see a tiny drop instead of the big bump you expect, and then
sell for a loss. If you aren't a seasoned trader, just stay away.

TL;DR- If you have to ask, you probably shouldn't do it.

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rluhar
Would you care to elaborate on how exactly this "scam" works?

The job of the underwriter is to guarantee that a certain amount of stock is
sold at the point of IPO. They are paid to canvas their clients and market the
IPO. That is what they do. I would strongly recommend you try and understand
how IPOs work and how capital is raised before you bring out the pitchforks.

If you are curious, I would recommend reading the blog post below which will
explains, probably better than I ever could.

[http://epicureandealmaker.blogspot.com/2011/05/jane-you-
igno...](http://epicureandealmaker.blogspot.com/2011/05/jane-you-ignorant-
slut.html)

[EDIT]: Let me just add - yes, the underwriters may offer the stock to their
clients at a rate that _may_ be lower to where the market goes when the shares
start trading. The underwriter's clients may decide to take profit in the
first few days if the price shoots up. The stock price will be volatile either
way. So if you are considering buying Facebook stock, and are prepared to hold
for a while, buying at the time of opening may be OK. If you are afraid of
short term volatility, wait until the price settles down.

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socialist_coder
I am always curious why companies like this want to IPO. Do they really need
the cash in order to further grow their company?

Or is it solely for compensation of their founders & employees?

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furtivefelon
they passed 500 stockholders, so they must go public, per rule of SEC

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frisco
The 500 stockholders rule says nothing about going public. It says that they
must adhere to the same onerous reporting requirements as public companies.
Therefore, many companies choose to go public at that point and get some of
the benefits along with the complexity.

(Also, it's worth noting that Facebook was exempted from that rule in 2008,
anyway. See
[http://www.sec.gov/Archives/edgar/vprr/08/9999999997-08-0430...](http://www.sec.gov/Archives/edgar/vprr/08/9999999997-08-043090))

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tocomment
So all I have is a dinky etrade account. Whats the best way to buy some of
this?

Specifically if I put in an order the night before will it be executed sooner?
Should I do a market order or a limit order?

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getsat
Trailing stop loss order.

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tocomment
I don't see that choice. Would it have another name?

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togasystems
Should I buy?

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nekojima
I'd suggest a sophisticated investor would hedge with derivatives in
anticipation of the substantial downside risk.

At the $100bn valuation there would likely be far more downside risk than
upside, despite the likely initial upside buying. Which could last just a few
minutes or hours. With the lower $50-75bn valuation, the initial upside is
more likely than with the higher valuation, though a flat pricing band for
several weeks or months is more probable. Profit capture would be difficult in
this scenario.

* These are general comments on Facebook's valuation and is not investment advice, please consult with a registered investment adviser. :-)

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secretasiandan
Please explain "hedge with derivatives"

(Edit 1)

My issue with what you say : I believe options (the derivatives I assume
you're talking about) don't start trading till a while after the stock starts
trading.

Furthermore, even if they started trading when the stock starts trading, why
do you think you have positive expected value to buy the stock and also buy
puts? Why not just buy calls?

If either one of these is positive expected value, why do options market
makers sell them at the price they do?

Additionally, your talk about the valuation seems trite : you're more likely
to make money if you buy at a $50B valuation than if you buy at a $75B
valuation is supposed to be informative?

(Edit 2)

Yes, I see your explanation, but you're (again) not really saying anything.

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nekojima
Please see my explanation to the other comment. Thanks.

Edit below in response to your edits.

In the US, options can be written from the day of an IPO and in the case of
the Facebook IPO would likely be from existing retail (employees) and
institutional investors looking to make revenue on the shares they own by
loaning them out for options trading. Though not from the IPO's underwriters
who can not loan out shares for options until 30 days after trading begins.

For the valuation I was writing about the up and downside risk of investing at
those valuations. It might be obvious to you, but not to others. Actually a
lower valuation in some cases could deter investors who had initially heard it
would be much higher and they may not understand why an initial prospective
valuation decreased.

There are a range of trading strategies that can be used for an IPO. The
example I gave was to cover both increases and decreases in the initial
trading price that would (usually) allow the investor to capture a (mostly)
risk-free profit.

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farrel
$5B with a projected $50B - $75B market cap means less than 10% of FB shares
will be on the open market.

Guess they want to keep demand (and the stock price) high...

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dmix
How does this compare to most IPOs?

Is it large or midsized?

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mtjl79
It's one of the largest IPO's in history.

[http://www.quora.com/Facebook-Inc-company/Will-Facebook-
be-t...](http://www.quora.com/Facebook-Inc-company/Will-Facebook-be-the-
biggest-IPO-in-history)

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wallflower
What should we be looking for in the S-1?

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secretasiandan
One of the commentators on bloomberg (who asserted he always believed that the
IPO size would be around $5B, on the lower end of the range) said he thought
facebook credits would be a suprisingly large percent of total revenue and ad
revenue would be lower than expected.

Reading between the lines: it may net to what everyone expects but the
composition is important. It may suggest that Zynga is a good barometer for
how facebook itself will fare.

