Facebook Could Not Have Picked A Worse Time For An IPO

Facebook (NASDAQ: FB) is the most highly anticipated initial public offering (IPO) since Google Inc (NASDAQ: GOOG) went public on August 19, 2004. Facebook stock priced at $38.00 a share, which values the social networking site at $104 billion.

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While many investors are excited about the huge IPO, it could not be going public at a worse time. The major stock indexes have been declining sharply lower since May 1, as traders eagerly await Greece's departure from the European Union. Most of the European stock indexes remain under heavy pressure as credit rating agencies downgrade European banks and euro-zone countries on a daily basis. Asian stock markets have also been under heavy selling pressure lately as the markets continue to deflate and trade lower. None of these important factors make for an ideal environment for the Facebook IPO.

If Only
If FB went public in early April when Apple Inc (NASDAQ: AAPL) was hitting new highs, it would have probably traded above the $100-mark. However, that is not the case today. Many of this year's dot-com IPO's have been flops. Highly anticipated stocks such as Groupon Inc. (NASDAQ: GRPN), Pandora Media Inc. (NYSE: P), Zynga Inc. (NASDAQ: ZNGA) and FriendFinder Networks Inc. (NASDAQ: FFN) are already trading below their opening-day prices. One stock that has been very volatile is LinkedIn Corp. (NYSE: LNKD), which is trading above its IPO price and remains a very popular stock.

Investors are now wondering if Facebook will be a good stock a year from now. That is certainly anyone's guess. One fact we all know, the company is the largest social network in the world. Is this social-networking stuff just a fad? I'm sure we all remember MySpace. That company was bought by News Corp (NASDAQ: NWSA) for $580 million in 2006. Recently, News Corp sold MySpace for roughly $35 million taking a huge loss on the deal.

Now let's understand, it was Facebook that put MySpace out of public favor. Either way, it will be fun to watch the public's reaction though most seasoned traders will take a wait-and-see approach. Until this stock can be charted, there's not much that I will be doing with the Facebook stock.