Facebook IPO. Could the Share open at 37 Dollars and go to 67 Dollars?

The Facebook IPO + my third blog on the matter.
Why? Because you're sick of it?


Because I keep getting asked about it.
And I'm going to give a view on the price + what will happen. Although the headline might give it away.


Of course I'm not a financial bloke (clearly, screams my friends) but I do have an understanding of a Nasdaq IPO having been through one as an isp and maybe, I have some understanding of the space. I also trade Forex online and some equities (I generally don't like them though).


But I'll make this shortish because I've dealt with the ins and outs before..... 


(if you're interested here http://streamabout.blogspot.com/2012/05/facebook-ipo-letter-from-zuckerberg-and.html and here http://streamabout.blogspot.com/2012/05/facebook-ipo-may-18.html).


Bizarrely well read posts, actually.


The view always revolves around these issues;


1. Interest in the Stock (Share). 


This is gauged both by comment/pr and the roadshow run by Facebook. I can tell you interest is HUGE, bigger than anything. Massive. (Although some wall street types took offence to The Zuck turning up in a hoodie. Respect.)


And it's being hyped by investors who deliberately want to drive up the price so they can profit. You can read their so called "blogs" which in "giving advice" are doing so for their own reasons. I'm not.


Shares will be bought by "ordinary" investors (Moms & Pops and Facebook users/supporters don't forget) and the pros know that - so they see a real chance to make money here. Interesting too the role of Morgan Stanley- at the forefront of recession causing it's argued.


If interest is huge, generally share price will rise.


2. Company performance. 


We all know Facebook so in this case it's practically irrelevant.
They will tell you that the share price is based on company fundamentals blah blah blah. Bollocks in this case. And in Googles, Groupon, LinkedIn.....


3. Access to shares. 


If you haven't opened a brokerage account, you need to do so quickly in order to be able to buy shares. Brokers might limit share dealing to certain clients under certain conditions (they see this as a windfall too) and disgracefully in some cases. More or less a "if you lodge this amount, I'll get you access".


When you hear talk of a "rationing of stock", it drives up price.


4. Price. 


We won't know the price until the market closes on May 17 and then that price is traded on opening on May 18th. But we do know a band of 28-35 usd has been indicated (lower than anticipated).


We also know the shares traded higher than that at 40+ usd on the secondary market. But they'll have to price it low enough to generate interest and high enough to make it worthwhile.


So here's what I think is going to happen.


1. Share Price will open at 37 Dollars (higher than the indicative band indicating early interest to the market....and, of course (!), giving early institutional investors an immediate profit).


2. On the day it floats, it will open to huge demand (very bullish) and over the first 2/3 days, it will then bounce and climb to circa 67 dollars (60 usd+ anyway). A 30% gain on the first day would bring it to 48 usd alone.


No one is saying anything like that (in fact, good traders tell me that I'm mad...we'll see) but I know Facebook will go past the magically 100 billion usd valuation mark easily (1st day) and well past it. They'll want that to get headlines.


3. It will then stabilise and then you'll see profit taking on a grand scale. So selling (bearish) at the 60+ usd mark. A Bear attack?


4. That'll bring it down quickly and as the market sees that trend they'll short it, to I think what will be the real long term price of 45 usd.


The opportunity is over the first 1 or 2 days.


Buying at 37 usd and selling at circa 50 usd seems to me anyway, a play.


BUT YOU HAVE TO WATCH IT ALL THE TIME because the market can start selling at any stage and you're following the market not yourself. You're doing what they do.


I do warn you, this is like forecasting the weather. Nobody knows.
And no more is that the case than in equities on Nasdaq.
Insider knowledge? Nah, doesn't exist.....


It could open at 30 dollars and fall to 22 Dollars.
But I think that's unlikely.


Mind you stranger things have happened and you're on your own.


But never spend money you can't afford to lose.
Having a go at this IPO might add to your interest perhaps in the space and that's no bad thing.


One thing I can say - I've never seen a show like it.