illuminance
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Facebook Goes Public - Why Facebook's IPO shouldn't excite you
(MoneyWatch) The investing world certainly seems to be working itself into a frenzy over the looming Facebook IPO. But before you jump in thinking you finally have a way to make real money from FarmVille and Words With Friends, you had better know your history.
Many people can point to Google as an example of a tech company making investors rich. The IPO set the share price at $85 a share, with the price now around the $580 mark. However, just consider some other recent IPOs.
LinkedIn saw its share price climb as high as $122 on its first day and then settled at $94.25 on that day, jumping up from its $45 initial price. Remember that most of those gains aren't experienced by individual investors, but by institutions that get the first crack at the stock. Those who jumped in after the first day have likely been disappointed, as the stock currently trades around $72.
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Zillow saw a similar spike during its July IPO of trading as well. The company priced its IPO at $20 per share, with the stock ending its first day at $35.77. The stock currently hovers around $30. Pandora offered its shares at $16 when it went public in June. Now, the stock trades around $13.
Of course, these are recent, isolated examples, and investors shouldn't jump in without understanding how IPOs have performed historically. Let's look at the reality of actual performance of IPOs:
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http://www.cbsnews.com/8301-505123_162-57369940/why-facebooks-ipo-shouldnt-excite-you/
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