There is no denying the fact that getting in on an initial public offering will forever be a risk. The 90’s are behind us and the days of the guaranteed gain on any tech company who races to go public have long passed. You needn’t look any further than Groupon Inc (NASDAQ:GRPN), Zynga Inc (NASDAQ:ZNGA), and Facebook Inc (NASDAQ:FB) for a more concrete example of how the individual investor can be ravaged from the opening day of a newly traded stock. And these, collectively, were nothing short of the “darlings” of the investment world. It’s no wonder following these debacles, that Twitter has since steered well clear of an S-1 filing to signal their intent to go public. Instagram also did the smart thing by simply waiting for Facebook Inc. (NASDAQ:FB) to acquire them. That said, it’s not a stretch to say that they probably wished they asked for more cash and considerably less Facebook stock when they negotiated their acquisition. That famed “billion” dollars is far from a “billion” dollars until (if) Facebook Inc (NASDAQ:FB) returns to their $38 mark that began their (very) public downfall.
Groupon Inc (NASDAQ:GRPN), Zynga, and a host of others’ futures are going to be tied to Mark Zuckerberg’s first public address since Facebook went public. Unfortunately, for each of these companies it wont be the terse, but infinitely more likable, Jesse Eisenberg who portrayed him in “The Social Network.” Although Eisenberg played him as a bit of a d#$k, it’s difficult not to fondly remember his walker killing antics in “Zombieland” or his love struck character in “Adventureland,” a curve ball, or change of speed, that quite simply Zuckerberg doesn’t possess.
In August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More
One of the biggest obstacles for Zuckerberg will be the fact that he doesn’t seem to care about money. I suppose if I had enough money to buy God’s summer house in the Hamptons at the listed price without negotiation, explains his attitude. However, if you’ve just lost a fair chunk of your savings as inside investors and underwriters gained on Facebook, this is as difficult to stomach as uni (sea urchin) is for the majority of people.
Groupon Inc (NASDAQ:GRPN) and Zynga Inc (NASDAQ:ZNGA), unlike Facebook Inc (NASDAQ:FB), are scared with good reason. The cost of competing with what were two unassailable companies has come down dramatically. The new Zuckerberg is out there and simply awaiting an angel investor to replace the first two with a more competitive business plan, new interface, or likability. Facebook Inc (NASDAQ:FB), on the other hand, is not going anywhere.
The IPO gain is not gone, it’s simply become a recent victim to a more discerning and critical market in recent years. And that is the trouble with Tribbles.