One thing a lot of people seem to be assuming, unwarrentedly IMHO, is that MKTW's closing value of $97 is a result of totally natural demand for the stock, and as such, has no downside.
In practice, though, I think you will find that the vast majority of the buying demand for MKTW was from arbitragers, meaning, in this case, people who were buying MKTW and at the same time short selling DBCC, to take advantage of the disparity between their relative market valuations. Think about it: Net IPOs often double, even a triple is not out of the realm of possibility, but a five-and-a-half bagger?
So now, people are going to be unwinding positions. True, this does mean some covering on DBCC, but it also means MKTW will be sold off. IMHO these forces will tend to cancel each other out in the short term.
As for tomorrow: unfortunately, people have been trained to leap first and look later when someone whispers the word "Internet". Given the intensely strong feeling by the longs here that MKTW's IPO would instantly bring wealth upon wealth to DBCC's shareholders, it seems fair to assume that a considerable number of people (I am thinking people such as this unfortunate: #reply-7300533) may have bet too heavily on it, and are having their margin calls processed over this weekend. That means some forced selling Tuesday morning, and a free covering opportunity for the shorts. Maybe not $12-15 low (then again, has not Anthony had this one pegged so far?), but I think below $20 is quite likely. |
