For the past week, InvestorPlace has conducted a poll gauging your thoughts about the Facebook (NYSE:FB) IPO. Out of more than 1,400 respondents, about 76% said they would not buy the offering. More than 18% indicated they would wait at least a couple months.
Of course, this turned out to be the right move, with Facebook’s stock off 22% from its open on Friday.
As we’ve pointed out in the IPOPlaybook, the hype was too intense for the offering — and it looks like Facebook took full advantage of it. The result was an overpriced IPO.
So should you jump in now?
For quick-fire traders, there certainly will be ways to profit from the volatility. But if you are interested in the long term, it probably is best to hold off.
In three months, Facebook’s lock-up provision will expire, allowing insiders to sell their positions. Since the recent weakness in the stock was based on too many shares, it seems reasonable that there could be a another drop-off.
Besides, it’s also usually a good idea to wait on investing in an IPO until at least the first earnings report. This should provide a better idea if Facebook’s business is truly slowing down. Plus, Reuters reported that an analyst from Morgan Stanley (NYSE:MS) dropped the revenue forecast during the roadshow — in light of this, many other analysts could follow.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.