Facebook’s
highly anticipated initial public offering today helped the company
raise $16 billion, a record for tech IPOs. It’s refreshing to see
investor excitement rally around the stock, as the U.S. needs innovative
businesses to thrive and attract capital. However, as behavioral
finance warns, be cautious of a herd mentality.
Last November, the IPO deal of the day was Groupon. On the first day of
trading, shares rose to a high of $31 from an initial offering price of
$20.
By Thanksgiving, the stock had fallen below the IPO price, and only a
few months later, uncertainty popped up around the company’s accounting
methods and financial controls. The stock fell further, with the market
devaluing Groupon by about 50 percent in only six months. How’s that for
a group buy?
It’s interesting to note that the value of Groupon’s stock has lost
more than $13 billion since the peak on the first trading day through
April 30. For comparison, if you look at the total net assets in
Lipper’s precious metals mutual fund peer category, assets fell $8.3
billion over the same timeframe. Investors lost more than $5 billion
more in one tech stock alone than in all of the precious metals funds
combined.
No comments:
Post a Comment
Thank you for your comment.