Thursday, May 17, 2012

This post is to discuss the untold reasons why Facebook will pop some, but not like LinkedIN's IPO.

PRO-POP
1) Taxes!!!! The clueless big media isn't covering this angle. $FB took on a new taxing system that would create a taxable event upon the IPO. So, sure companies need to try to capture as much value as possible and limit the pop, but that comes wit risk. Risk the stock drops if you push it too high. Even if that risk is 5% or 10%. So if the stocks do NOT pop, and Facebook employees have to pay a 45% tax on the IPO price of $38, they will be even more pissed. So Mark needed to be conservative on that front. Now the big question is whether Facebook will give more of the shares to retail investors via Etrade etc, Pre-ipo like they promised.

 2) The market downturn might have been due to people moving to cash to have for Facebook. Etrade required me to have cash ready to buy the IPO. So I had to sell most of my holdings.

 3) Facebook can easily overtake Google. So a pop that surpassed Google is possible/likely. People say "I don't click on Facebook ads". But they don't realize that every click is 50c to $2 per click. If the average person clicks once a YEAR, they make a ton of money. And now they are charging users to highlight their updates. $2 each. Boom, billions might result. Just the smallest tweaks can skyrocket profits. Just like google got their pay per click model from one simple company they acquired called overture. Boom, skyrocket.

 4) Mobile It isn't about ads. It is about the Open Graph. Value in being the middle man and making connections.

 NOT a huge LinkedIN pop:
1) Only one wsj article covered how there is a new law that requires a limit order at the opening. S unlike LinkedIn pop, a retail clueless but can no longer put n a market order at the open. That should curb the crazy 100-150% pop.

 My prediction / guess is it opens at 52, high of 74, closes at 57.


Enter your Prediction for Facebook Closing day here: http://www.facebookipodayclosingprice.com/

 Frank

 Disclosure: I am hoping to get Pre ipo stock via etrade.

Anybody buying etrade stock? I bet their new users have skyrocketed. Couldn't that help their bottom line?