On the first day or even hours it went public, Linkedin soared. Many jumped in thinking that this company could be the next Google. Of course, Tekedia was clear that Linkedin is worth just $50 or less and not the $100 it once traded. The reality is that Linkedin is normalizing after the early noise.
So if you have followed the euphoria and bought at the high of $100, you will be in red now. The stock is down to less than $80. Of course, nothing says that it will not go up or even come down more. But before you decide to go long or get out before you get burnt, read the following facts:
– 30 million shares were exchanged in the first day it hit the stock exchange
– There were 7.8m shares. This implies that each of them traded about 4 times that day
– The big boys in the high frequency trading room just came to work that day, buying and selling. At the end, they got out
– Who are holding the stocks? The individual mom and dad investors.
– Most have lost at least $20 so far
Be careful when someone tells you that Facebook is worth more than Boeing, Ford and those iconic companies. It could be, but it can also fizzle out in days. Just ask MySpace what happened after 2006. Buying these social media company stocks is not what you do and go home and sleep.You need to be alert as the market is very disruptive.