Facebook Day Three
Facebook gets more interesting.
The stock opens below 33 and closes at
31.
There are reports that the underwriters
reduced
their revenue projections for Facebook and that this information went
to some and not others. This could bring serious legal complications.
More importantly Finra says 30 million
shares of Facebook were sold short in the first two days.
Chart courtesy of Stockcharts.com
This tells us that the underwriters
thought the stock had more demand than it did, and that the shorts
had a field day.
Short interest is up in many other
social media stocks. The shorts correctly saw Facebook as a bubble and have profited nicely. They have a big short in Zynga, but unless they know something I don't know, they may want to look to take some of that back and lock in profits. Wall Street is one place where it does not pay to be too greedy.
My opinion, the FB underwriters, seeing
the volume drying up, could try to make a stand at 31. I would not look
to buy the stock until it makes a clear bottom. Neither would I try
to short it at $7 below the offering price.
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