Thursday, November 07, 2013

No luck on the Twitter IPO

I just called my broker and he confirmed that they did all their allocation calls for the Twitter IPO last night and that they had gotten only a "very small" allocation. Oh Well. That's that. Hey, I tried.
 
Now back to how to play the open market.
 
Two numbers popped into my head last night and this morning, $40 and $55. I think Twitter could open at either.
 
If Twitter had come before Facebook, I'm sure the opening pop would be much bigger, but with so many people being gun-shy due to the Facebook IPO fiasco, I think a lot more people will hold off from jumping into the open market. I mean, it will tend to be an either-or; either you got in on the IPO or you are going to wait a few days, weeks, or months to see how the stock trades being jumping in. Sure, there will indeed be a frenzy of trading at the open and throughout the day, but it will likely be more moderated than if the Facebook IPO hadn't flopped.
 
My attitude is that I would have bought a boatload in the IPO itself, but that without an IPO opportunity I would rather keep most of my powder dry and deploy it on 15% dips. I don't expect a Facebook-style opportunity for a 50% dip, but I'm sure Twitter will be somewhat volatile over the next year, especially when lockups expire in three months and six months.
 
Now, out for my walk and time to make a final decision on my initial play. I'm currently leaning towards waiting until an hour after the Twitter open (whenever that is) and buy a small position at market when the initial dust has settled. I may also submit an even smaller market order at the open, on the small chance that the stock really could fly right from the get-go.

-- Jack Krupansky

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