Rob,
I was recently asked the exact same question on Raging Bull and will copy over what I wrote there. I am by no means an IPO expert, but my thoughts are below. I would also check the chart of AETH, perhaps a comparable recent IPO, to see what its behavior has been since the IPO. I do, however, have a sneaking suspicion that 724 may be hotter.
I personally would NEVER place a market order on the first day of trading. As a matter of fact, Schwab won't even let you because of the risk.
I don't know how it will be compared to AETH, but that's a similar IPO I've seen in the past few months. I did get into that one on day one, but have sold already. Wishing I hadn't though.
From the few IPOs I've watched, they spike real high out of the gate then fall back sharply as pre-IPO shares are dumped. They then bottom out and head back up not quite reaching the first spike only to tank again as traders have their way with it. The second dip doesn't go as low as the first. The chart looks like a nice harmonic wave until it settles down. When I bought AETH I tried to buy on that first dip since it is usually the most severe. I missed the bottom by 4 points, but in the end, it didn't matter.
As I'm sure you realize though, this IPO could behave very differently. You just have to watch it like a hawk and pick the right moment.
And then I posted up this in a follow-up...
I would bet the stock will open over 50, if not well over. I seriously doubt you'll see anywhere near 20.
Check an intraday on 10/21/99 of AETH to see what I mean. I don't remember exactly, but I think it priced at 16 and opened over 50. I bought in in the mid-40's on a dip. I don't think it ever got lower than the low 40's. |
