FB: Equity trader sees Facebook stock as doubtful investment

Friday, 18 May 2012 04:51

Courtesy of RT.com

Two days ahead of an IPO, the social networking site Facebook has announced it will sell 25% more shares than previously announced. The decision came as a result of high demand for the company's shares. However, the head of equity trading at VTB Capital, Oleg Achkasov, believes the stock is unlikely to retain its value.

“I think it’s pretty obvious, that the technology sector has done well in the last few years, it has done exceptionally well this year as well. Apple has become number one company in the world by market cap. And certainly Facebook is an attractive asset. The demand, according to the rumors, is quite substantial. But it has been placed at quiet high multiples. I would be very surprised if the stock actually performed really well in the aftermath. It may in the first two sessions, given that demand seems to be pretty high and more than the issue. But the current shareholders will not only sell in the placement, but they will also sell afterwards, reducing their stakes - to remind you, there are a lot of portfolio investors already invested in Facebook, such as paired equity funds. And that will cap any gains in the stock, and then the investors will look at the performance. I doubt it would lead to extra positive sentiment, particularly because money has been taken out from the market and demand is being taken out from other stocks.”

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