I'd like a few shares of Facebook, please

Article by: JOHN EWOLDT jewoldt@startribune.com
Updated: May 16, 2012 - 3:27 PM

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flossy2012May. 16, 12 6:46 PM

Most IPOs lose money. The investment firms know this. But they don't tell the clients that when they are trying to sell the shares. $100 billion is an incredibly inflated valuation for Facebook, to begin with. The probability of Facebook generating sufficient income to justify such a lofty valuation is slim to none. For every IPO that resulted in big gains for the original investors, there are 8 that result in losses. The only hope is to get in on the IPO and flip the shares right away if there are enough chumps around willing to pay an even more inflated price in the aftermarket when trading starts. Anyone who invested in Groupon when it started trading lost big.