Facebook Could Be the Most Important IPO to Ever Hit the Markets – But Not for the Reasons You Think

The Facebook (FB) IPO is the most important IPO to hit the stock market in …..forever. Not because of its size in dollars. Not because of the gap up it may experience in its first day of trading. Nope. Its the most important IPO ever because:

1. It could lead to individual retail investors coming back into the market.
For the first time in a long time I had someone ask me what I thought about an IPO. THey wanted to know if they should buy Facebook at its IPO.

If lots of individual, retail investors do buy into Facebook and they make money at it, that could lead to individual retail investors coming back into the market. Something that individuals smartly have avoided for the last several years.

Retail buyers making money would be great for the market..

or would it?

2. High Frequency Traders LOVE RETAIL INVESTORS.
Facebook will be a highly liquid name. Perfect for High Frequency/Algorithmic Traders (HFTA). If Facebook is a huge draw for individual retail investors, HFTA Traders will see them as lambs waiting to be slaughtered. They will feast on the unwashed, unsophisticated mass of retail buyers dashing into Facebook. They will pray that the stock skyrockets and stories of individuals making out like bandits are spread throughout the media. They will attack this stock like a pack of wolves.

What happens from there is anyone’s guess. But I can tell you that no one is hoping for an explosion in the price of Facebook more than High Frequency/Algorithmic traders.

Facebook could be the most important IPO in the history.

But not for the reasons you think..

About Mark Cuban 144 Articles

Mark Cuban is the owner of the Dallas Mavericks basketball team, billionaire internet entrepreneur, and chairman and owner of the high definition television channel HDNet.

Mark made business history when at the age of 32 he sold his computer consulting firm MicroSolutions to corporate giant CompuServe and became fabulously wealthy overnight. Cuban later did the same with yet another enterprise, the live streaming Internet operation Broadcast.com, and sold it to Yahoo! for a record breaking price that pushed his own net worth into the billions.

He publishes his own blog at Blog Maverick where he speaks freely about basketball, technology, business, and the Internet.

Visit: Blog Maverick

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