Grey trading on the Facebook IPO price
AS THE buzz continues about the Facebook public offering later this year, IG Markets is offering grey market trading on the social networking site’s market cap. The grey market allows shares to be traded on an unofficial market ahead of the IPO expected in May.
When it filed with the Securities and Exchange Commission on Wednesday last week, Facebook stated that it sought to raise $5bn, however that number is only a placeholder and the figure will likely grow in the build up to the hotly anticipated launch.
“Based on Ocado and Betfair, our grey market ended up being not a million miles away from the actual price on debut,” says David Jones, chief market strategist at IG Markets. “With Facebook talking about a May start of trading, there is still an awful lot of time left to go and at the moment our clients appear to be valuing it above the top end of expectations.”
The IG price started at $92bn last Thursday and had steady buyers all through the day. It peaked at $123bn, but has seen some selling since then (see chart, below right for yesterday’s trading.) The stock is seen by many as being hugely over-valued, but at this stage in the game the grey market trading price is being driven by excitement and media hype over any real fundamentals, something that may change as more detail about the launch slips out into the public domain. “We have run this in the past for the likes of Ocado and Betfair and saw little interest from clients” says Jones. “This time round it has been different, presumably because everyone knows Facebook and has an opinion.”
BETTING ON THE BELL
Elsewhere, bookmakers Paddy Power are offering odds on who will ring the New York Stock Exchange opening bell on the day of the Facebook flotation – Mark Zuckerberg is the clear favourite at 1/100, with Sean Parker and Bill Gates currently being offered at 25/1 and 50/1 respectively. U2 lead singer Bono, who owns shares in Facebook via his private equity firm Elevation Partners, is a long shot at 100/1.