The Facebook IPO has been the talk of the town for the last year. Discussions really heated up in the last month when they set the date. Well today (May 18th 2012) was the big day. Was it worth it? No.....
Facebook (sym: FB) was talked about reaching prices of $60-$70-$80 on its big debut. They day's high was only at $45 with it finishing around the IPO price of $38. The $38 bottom for the day was due to the help of the underwriters. They are still sitting on tons of shares that they are unloading at that price. This is creating a false support
. Once those shares dry up we could see a lot lower prices come in.
What was amazing though was the amount of volume that poured in. The daily volume was almost double that of the SPY, S&P 500 ETF. That is just impressive.
So what do we take away from this IPO?
- Don't believe the hype
- Never just buy in the morning and hope it goes up for the reason of 'just because'
- Stick to technical analysis and wait for the setups
- Trading IPOs on their debut day is usually pointless and results in losses
- Sympathy plays are not high probability on IPOs
Here are some sympathy plays: