As the Facebook selloff continued yesterday pushing the social media stock as low as $33 per share, Zynga stock had a better reaction than on Friday during Facebook IPO. In the meantime the major IPO’s underwriter, Morgan Stanley, took a hit at their reputation as they were accused by many traders, hedge fund managers and investors of the offering but the banking stock managed to absorb the tension and hold its price right at the weekly support level of $13 per share. Things didn’t go as planned for NASDAQ neither, since the IPO began with a 30-minute delay on Friday. I guess it was more than “Ready, Set,… ehm, Wait,… Wait a bit longer…, Go!” than my post’s title about Facebook IPO the other day.
The Facebook chart in the article’s beginning proves the enormous volume of shares traded in the first 5 minutes of Friday’s IPO. The underwriters expanded the number of shares by 25% just before the offering, overloading the stock market with too many shares, leading the demand for Facebook shares to be quickly dampened. With no sufficient demand the FB stock price was inevitable to go south and allegedly Morgan Stanley stepped up and held the support level at $38. Monday opened with a gap down at $36.80 and Facebook stock lost 4$ more in the first 20 minutes of trading. Not the best times for Facebook shareholders.
Where will Facebook shares end the week? - Vote at WSJ.com
Thankfully for Morgan Stanley their shares didn’t follow up. Instead MS stock managed to trade at around $13, which is a crucial support level at the weekly stock chart. In fact I would recommend buying Morgan Stanley stock at this moment, since a stop loss at $12 and a profit target at $20 would increase the reward/risk ratio of this trade to 7-1! Surely I would buy MS shares during negative news, but the greatest rewards come when you go against the market. Not something I usually do in stock trading, by the way!
Morgan Stanley Weekly stock chart
If you have kept up with the latest stock news about the Facebook IPO, you must have read a couple of mentions about Zynga stock. Zynga IPO took place several months ago and given their product is greatly attached to Facebook, it’s no surprise neither that Zynga gets mentioned at these times nor that ZNGA shares plunged on Friday from $8.50 all the way down to $6.50. On the contrary buyers appeared yesterday and Zynga stock closed at $7.09 in one of the biggest volume days this year (39M). At the moment I wouldn’t invest in either tech stock if you ask me.