The Wall Street experts predicted that social media giants would be the “next big thing” for big investment houses. In fact, prior to Facebook’s IPO, Wedbush started the stock with an outperform rating. Stern Agee initiated a buy rating before the stock even started trading.
The future was bright.
Social media became the “can’t lose” phenomenon of 2012. Or so we thought.
The stocks involved became nothing more than embarrassing flops. So if Twitter really wants to embarrass itself and wind up in the crap heap along with its competitors, so be it.
There’s a growing fear that these companies are simply valuing themselves on the strength of user numbers. Twitter may have 100 million regular users. But Facebook has 750 million and still suffered an embarrassing IPO.
With an $11 billion valuation, Twitter is greatly overvalued… and WILL flop on its day of IPO. Trust me. It’s happened before. It will happen again. These companies never learn.
However, we can still profit from the “anticipatory momentum” leading up to the IPO. And that’s because many investors are herd-like investors. There “sheeple” without a clue.
In the months leading up to the IPO, we’ll pick up well-placed positions in the First Trust IPOX-100 Index (FPX).
Stay tuned for exact trading instructions on this from Speed Retirement System.
Take good care,
Speed Retirement System