Facebook Filing Triggers Feeding Frenzy in Social Media Stocks
BUY BUY BUY
I can almost hear Jim Cramer on CNBC tooting horns and walking around his space yelling “BUY BUY BUY”. The reality is that FaceBook’s IPO has lifted the entire sector of Social Media stocks. For those that are wondering; why today, why not last week when the word was out that Facebook would IPO? That’s actually a very good question.
Typically Wall Street will ‘buy’ the rumor and ‘sell’ the news. That certainly wasn’t the case today, partly because many more details became available in the IPO announcement. One main fact that was re-iterated was the phenomenal growth rate and associated revenues associated with the announcement.
Those numbers certainly helped bolster a feeding frenzy in social media stocks. Below is a short list of the more common names and how they faired today:
- LinkedIn (Ticker symbol: LNKD), went public last May at $45 a share, today is up $4.50, or 6.2%, to $76.87.
- RenRen (an American Depositary aka ADR ticker symbol RENN) the Chinese social networking site that went public last May at $14. The stock closed up 41 cents, or 8.2%, to $5.42.
- Pandora (Ticker symbol: P) went public last June at $16, today, the music service’s shares are up 43 cents, or 3.3%, to $13.32.
- Groupon (Ticker symbol: GRPN) although not classified as a social networking stock still received a boost from the general enthusiasm today. It’s my opinion that a good portion of today’s move was based on the ‘hint’ that Groupon may be taking market share from LivingSocial. The company, which went public at $20 a share in November, closed today up $1.59, or 7.4%, to $23.08. The shares were trading below $19.50 just 5 trading sessions ago. That’s an 18% increase in under a week and the highest price for the stock since December.
- Zynga (Ticker symbol: ZNGA) ruled the realm today. Facebook mentioned in its filing that it relies on the company for 12% of its revenues. The company which went public in December at $10 a share closed up today $1.78, or 16.8%, to $12.39. Zynga traded as high as $12.91 today, eclipsing the ALL time high of $11.50 set back on opening day.
I have to toot my own horn on this one. In a report I filed on January 9th, I mentioned that it seemed as though Zynga shares were basing. More importantly I believed the shares would see similar appreciation that Groupon (GRPN) shares enjoyed leading up to the end of the 30 day quiet period. At that time, ZNGA shares were hovering near the $8.50 level. That equates to a 45% increase in share value based on today’s close. For more aggressive traders (myself included) I suggested taking a look at short term derivatives. As it turns out, the trade worked out much better than anticipated, thanks mostly to yesterday’s Facebook announcement. The derivatives gained a whopping 530% during that same time frame.
Stay tuned with us at Daily Deal Media, you may be amazed at some of the potentially huge winners and losers from the Facebook IPO.
Source: Forbes
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