They you can’t get enough of a good thing, right?
While some will argue if FaceBook is a “good thing”, investors can’t seem to get enough of the company’s upcoming IPO (Initial Public Offering) which is set for Friday.
The company has upped the offering price from $28-$35 to $34-$38 and will flood the Nasdaq with 420 million shares, up from 337 million. Based on these raw high-end numbers, FaceBook will easily have a market cap (MC) north of $100 billion.
Frothy? You bet.
Other companies that have been around for decades that could be worth LESS after Friday’s close on Wall Street include McDonald’s (MCD, $91.54, up $0.52) which has a MC of $90 billion, Home Depot (HD, $48.99, up $0.32) at $74 billion and Cisco Systems (CSCO, $16.72, up $0.18) which has a market cap of just under $90 billion.
We have heard reports that FaceBook is oversubscribed by 25 times in Asia and what about the little guys and gals?
If you have a brokerage account with Chuck (Charles Schwab), you must have at least $100,000 in assets and trade at least 36 times a year. For TD Ameritrade, your account would need to have $250,000, or, if you have made 30 trades in 3 months and feel like filling out a mountain of paperwork then you may qualify.
We have been with Chuck for decades but we don’t plan on participating in the IPO. We were thinking of adding it to our Weekly Wrap but we know not everyone will be able to get in at the IPO price. We also know shares will be volatile and the Weekly Wrap is all about safety.
However, this doesn’t mean we won’t be trading FaceBook down the road. We don’t plan on trading the stock but instead, the options.
We have a feeling call and put options on FaceBook will list fairly quickly but they will be expensive and there won’t be any charts to follow right away.
This is the beauty of options because it allows you to CONTROL 100 shares with just one option contract. If you buy 10 option contracts, you would control 1,000 shares of FaceBook.
It will also be a lot easier making 100% on a call or put option than trying to make money by flipping the stock. Be patient, folks.
FaceBook’s real IPO to us will be the options once they list for trading. We would like to say they will be available to trade in a couple of weeks, maybe sooner, but nothing is confirmed.
As far as the market, it has been another choppy day of trading but has so far favored the bulls. The Dow is up 48 points to 12,670 while the S&P 500 is higher by 4 points to 1,335. The Nasdaq is showing a gain of 5 points to 2,899.
We continue to lock-in profits when we can and we are rolling our Hard Stops up as we are locking in some huge winners ahead of FaceBook Friday. Tech could get a bounce and a rising tide will lift all boats but the trend is still lower.
We have a ton of info to cover in our Members Area so let’s get on it.