Facebook Inc (FB) IPO Win for Brokers, I-Banks (Maybe Shareholders)

Facebook Inc (FB) IPO Win for Brokers, I-Banks (Maybe Shareholders)


With Facebook Inc (NASDAQ:FB) IPO officially priced at $38, the only thing left to do is just wait until Friday’s opening bell. For some industry professionals, they anticipate a big trading day and volume numbers with the IPO.

Fuad Ahmed, chief executive of Just2Trade, a Washington-based online broker said to MarketWatch, “We’re probably going to get about quadruple our usual volume.There’s a lot of interest from retail customers. It translates to significant amount of trading volume.”

The online broker has several thousand accounts.

To benefit from the interest in Facebook, Just2Trade launched a new app to track IPOs. Clients can watch IPO price movements, which ideally lead to more trades for the broker.

Over at E TRADE Financial Corporation (NASDAQ:ETFC), it will supposedly offer 100 share blocks of Facebook to brokers but numbers on the total overall shares to them from the IPO allocations wasn’t available.

With Facebook’s decision to expand the amount of shares sold in it IPOs, it signals the healthy demand for the deal. This should translate into a strong interest for customers to jump in and start trading the stock once it goes live.

But brokers aren’t the only ones poised to benefit from Facebook’s IPO. There’s also the underwriters. This includes the big banks of Morgan Stanley (NYSE:MS), J.P. Morgan Securities (NYSE:JPM), Goldman Sachs Group, Inc. (NYSE:GS), Bank of America Corp (NYSE:BAC) and Barclays PLC (NYSE:BCS).

Retail brokerages will also get a “quick shot in the arm” said Ron Etergino of theflyonthewall.com to MarketWatch, “but it probably won’t help reverse the long-term trend of weak volumes in equities. We believe the overwhelming fear of missing the next big tech stock will force everyone to get involved, more than the potential for short-term trading profits.”

By looking at the first day of trading activity in some recent high-profile stock debuts, Facebook trades should do well on Friday and orders will be filled.

According to TD Ameritrade Holding Corp. (NYSE:AMTD), by looking at recent debuts, General Motors Company (NYSE:GM) had the greatest proportion of volume by an IPO; it grabbed 7% of the broker’s total trading traffic on the day it launched. Then, there was Linkedin Corporation (NASDAQ:LNKD); it represented five percent of  total trades on Ameritrade. The list then includes Groupon  Inc (NASDAQ:GRPN) at 4.3%, Pandora Media Inc (NYSE:P) at 3%,ZyngaInc  (NASDAQ:ZNGA) at 3%  and Dunkin Donuts (NASDAQ:DNKN) at 2% .

Ameritrade spokeswoman Beth Evegan said to MarketWatch, “IPOs drive trading volume for Main Street. Twenty-one percent of our clients that bought GM on the day of its IPO had not traded in three months. So one of the bright spots we observed was the IPOs bring about some re-engagement from retail investors who previously were sitting on the sidelines.”

But the hype about the Facebook deal won’t last forever. In an survey of 1,500 respondents conducted by equity research firm WhisperNumber.com, it showed some pessimism toward the deal once all the hoopla ends.

When asked if Facebook is still a buy after its IPO, 32% said yes but 68% said no. In regards to the view that Facebook is long-term investment after its IPO, 35% said yes but 65% said no.

On whether Facebook is a fad or not, it split: 49% said yes and 51% answered no.


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