17/05/13

Facebook IPO bubble?

Financial spread betters are predicting that the price of Facebook shares could increase in value by more than 40% after their first day of trading on Friday.

With estimates of the initial price of shares at launch anything from $36 to $40 dollars, clients at leading spread firm Spreadex have been speculating that shares could end trading above $56 after their first day.

Spreadex spokesman Andy MacKenzie said: “We have a market allowing customers to trade on the percentage change in the price of Facebook shares after the first day’s trading and as the big day approaches there has been appetite from clients in buying on the price, moving the spread up from 30%-35% earlier in the week to 35%-40%.

“Our spread was as high as 60%-65% in February but the issuing of greater number of shares meant that our percentage change prediction fell accordingly. Therefore before the shares were even made available to trade on the open market we’ve had some clients making profits from our Facebook-based market.”

Previous IPOs of this kind saw LinkedIn float at $45 and close the first day up 109% at $94.25, Groupon float at $20 and close its first day up 31% at $26.11 and social game maker Zygna float at $10 but actually close its first day down at $9.50.

MacKenzie added: “Although our market has been popular with clients, we have had some customers holding back based on their belief that Facebook shares may actually fall back in value after the furore over the initial launch has died down.

“This is where spread betting comes into its own as clients will be able to buy or sell on the future price of Facebook shares with Spreadex once the shares hit the market depending on their viewpoint.”