Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

IPO

An IPO is an Initial Public Offering. This is the initial sale of stock to the public from private investors and holders of the company. There are several reasons why a company would issue stock to the public. Publicly traded stock allows the company to offer shares in mergers and acquisitions, easing the mechanism in purchasing other companies and lowering the cost. Publicly traded stock also allows the company to offer incentives to employees, by giving shares of stock. The greater exposure and publicity also help retain and attract talented employees and management. The value of a company is also higher compared to when it’s private. This is because increased levels of liquidity and transparency are more attractive to investors, who will allocate a higher multiple for the company’s value. The biggest downfall to a company issuing stock to the public is greater scrutiny from investors, as all financial records are made public. This comes in the form of an increase in legal and marketing costs, plus time spent with analysts and other investors explaining the inner workings of the company.

NASDAQ, Russell 2000 Signaling Buying Opportunity Ahead?

By for Profit Confidential

Why I'm Concerned About the Stock Markets Near-TermFolks, I’m beginning to get somewhat concerned about the stock market in the near-term. I’m not saying the stock market is going to crash, but there are some technical indications of a possible correction or adjustment in the near-term.

The S&P 500 recently traded at a new intraday record, but the key stock market indices have declined in three of the last four sessions. What makes matters worse is that the downward slide in the stock market was associated with higher-than-average trading volume, which is a bearish indicator in technical analysis, as it suggests a pick-up in selling momentum.

We all know that momentum can be good or bad depending on which way the stock market is going and whether you long or short the stock market.

What concerns me is not only what’s happening in Crimea and the concerns regarding the Federal Reserve’s recent actions, which I have previously discussed. (Read “The Stock Market Needs to Do This in 2014 Before I Invest More in It.”) Rather, what really concerns me is that we are now seeing a breakdown on the charts of the momentum technology stocks that had helped to drive up past euphoria in the stock market. We are seeing many of the high-momentum stocks fall by 10% or more. This suggests fragility and a potential downward slide coming up for the broader stock market.

Also, the disappointing initial public offering (IPO) debut of King Digital Entertainment plc (NYSE/KING) Wednesday was a red flag; it suggests that the IPO market may be losing some of its recent appeal or that traders are simply nervous about … Read More

My Top Stocks in the Mobile Gaming Sector

By for Profit Confidential

Why I Believe There Are Better Mobile Gaming Investments Than King Digital If you have ever played the Candy Crush Saga game on your mobile device, you’d realize that the game, along with others like Flappy Birds, are merely a mobile phenomenon that could easily fade away over time once the addiction washes away, based on my stock analysis.

Yet for King Digital Entertainment plc (NYSE/KING), the maker of Candy Crush Saga, the company is clearly jumping with glee that it’s valued at more than $6.0 billion. The stock debuted with its initial public offering (IPO) on Wednesday priced at $22.50 per share, but it quickly fell to $19.17 after the open.

Make no mistake about it: my stock analysis is that King Digital is not worth $6.0 billion—or even half of that. The company generates about three-quarters of its revenues via the Candy Crush game. There are other games, but none have taken off to the degree Candy Crush has. While King Digital says it will look hard at developing another major game, there’s no guarantee that this will happen before interest in Candy Crush fades, based on my stock analysis.

What I suggest you do is look at more established developers of mobile games and applications that are much cheaper and not pumped up like King Digital, as my stock analysis suggests.

Based out of San Francisco, Glu Mobile Inc. (NASDAQ/GLUU) is an interesting small-cap gaming play that holds promise in the growing area of mobile gaming on smartphones and tablets, as my stock analysis indicates. Spending on mobile applications is estimated at around $56.0 billion by 2016, according to Forrester Research. With a market cap of … Read More

The Great Social Media Stock Bubble of 2014

By for Profit Confidential

Allan Greenspan Be Bearish on the Stock Market Right NowA few days ago, I woke up to news that reminded me of the “Dot-com Boom” of the late 90s and early 2000. I’m sure you remember those days—the days when any company with “.com” attached to it received a lot of attention….and a high stock price. Investors bought these stocks without any concern for non-existent revenues; forget earnings.

These days, social media stocks are the new “dot-com” wonders. We recently heard that Facebook Inc. (NYSE/FB) bought “WhatsApp,” an instant messaging application for smartphones, for $19.0 billion. The valuation doesn’t make much sense; the company has only 50 employees, 460 million monthly users, and no clear business model.

Last year, we saw Twitter, Inc. (NYSE/TWTR) do an initial public offering (IPO). On its very first day of trading, the stock price increased by more than 70%. This company lost more money in 2013 than it did in 2012. Twitter’s loss per share in 2013 amounted to $3.41 compared to a loss of $0.68 in 2012. (Source: Twitter, Inc., February 5, 2014.) But investors shouldn’t fear; in the last quarter of 2013, hedge funds got into the game and bought Twitter’s stock.

Dear reader, I’m not saying Facebook or Twitter is a sell. What I am saying is that the behavior we see on the key stock indices, especially for social media stocks, is not sustainable. It resonates with what we have seen in the past—investors pouring money into companies with no business model to generate profits.

In Allan Greenspan’s past words, key stock indices are showing signs of “irrational exuberance.”

I’m concerned about the big picture for key stock … Read More

Top Three Tech-Based IPOs to Watch for This Year

By for Profit Confidential

Where to Watch for This Year's Top IPOsThe last big initial public offering (IPO) in this country was the debut of social media play Twitter, Inc. (NASDAQ/TWTR), which has returned some staggering gains for its initial investors, in spite of an extremely obscene valuation assigned by the stock market. (Read “Two More Internet Stocks to Watch.”)

Yet in spite of the colossal overpricing of numerous IPOs in 2013, the market demand for new issues is insatiable. As we saw in 2013, IPOs are being driven upward by a market that’s looking for growth and a buying opportunity to make some quick returns.

The current bullish sentiment towards the IPO market is not to the same scale as we witnessed back in the late 1990s, when an early allotment of shares of an IPO attracted frenzied buying and a mad dash to buy the stock, even at outrageous prices.

In the current investment climate, there are several ways of playing the IPO market if you are not one of the preferred clients (the top one percent).

When the IPO is hyped up, you should always wait for the stock to come back down after its initial surge. Do not chase hot IPOs on the first or even the second day. This is especially true in cases when the IPO is showing an extreme valuation that doesn’t make sense.

Facebook, Inc. (NASDAQ/FB), for instance, traded at $45.00 on its IPO debut on May 18, 2012, but it subsequently plummeted to $18.80 on October 19, 2012. The company had more than one billion subscribers, so you knew the revenues and earnings would come once the company … Read More

Top IPOs to Watch for in 2014

By for Profit Confidential

My IPO Watch List for 2014The market demand for initial public offerings (IPOs) is strong, as investors search for additional sources of opportunities to make money.

While there have been some poor-performing IPOs this year, there have also been numerous stocks that have debuted to stellar gains. With strong market conditions for new issues, we are seeing a rise in the flow of companies wanting to come to the capital markets and take advantage of the current euphoria for IPOs. The reality is that the increase in IPOs also suggests some froth in the stock market that investors need to be careful about.

The biggest and most highly anticipated IPO this year was, of course, Twitter, Inc. (NYSE/TWTR), which has made many of its early investors rich. The stock was priced at $26.00, surged to $45.00 on its first trading day, and is currently trading at a new high above $50.00. The amazing thing is that Twitter doesn’t make money, and there’s no timeline as to when this will happen, as the company tries to monetize its users. (Read my take on Twitter in “How Small Investors Can Still Get a Piece of Twitter.”) Apparently, the stock market doesn’t really care if an IPO makes money, as long as the theoretical potential is there.

Facebook, Inc. (NASDAQ/FB) was another hyped-up social media IPO that had more than a billion users when it first debuted but hadn’t figured out how to make money from them. The stock actually fell down to the $17.00 level from its $45.00 IPO high, but this was a great buying opportunity, especially if you believe the company … Read More

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NASDAQ, Russell 2000 Signaling Buying Opportunity Ahead?

By for Profit Confidential

Why I'm Concerned About the Stock Markets Near-TermFolks, I’m beginning to get somewhat concerned about the stock market in the near-term. I’m not saying the stock market is going to crash, but there are some technical indications of a possible correction or adjustment in the near-term.

The S&P 500 recently traded at a new intraday record, but the key stock market indices have declined in three of the last four sessions. What makes matters worse is that the downward slide in the stock market was associated with higher-than-average trading volume, which is a bearish indicator in technical analysis, as it suggests a pick-up in selling momentum.

We all know that momentum can be good or bad depending on which way the stock market is going and whether you long or short the stock market.

What concerns me is not only what’s happening in Crimea and the concerns regarding the Federal Reserve’s recent actions, which I have previously discussed. (Read “The Stock Market Needs to Do This in 2014 Before I Invest More in It.”) Rather, what really concerns me is that we are now seeing a breakdown on the charts of the momentum technology stocks that had helped to drive up past euphoria in the stock market. We are seeing many of the high-momentum stocks fall by 10% or more. This suggests fragility and a potential downward slide coming up for the broader stock market.

Also, the disappointing initial public offering (IPO) debut of King Digital Entertainment plc (NYSE/KING) Wednesday was a red flag; it suggests that the IPO market may be losing some of its recent appeal or that traders are simply nervous about … Read More

My Top Stocks in the Mobile Gaming Sector

By for Profit Confidential

Why I Believe There Are Better Mobile Gaming Investments Than King Digital If you have ever played the Candy Crush Saga game on your mobile device, you’d realize that the game, along with others like Flappy Birds, are merely a mobile phenomenon that could easily fade away over time once the addiction washes away, based on my stock analysis.

Yet for King Digital Entertainment plc (NYSE/KING), the maker of Candy Crush Saga, the company is clearly jumping with glee that it’s valued at more than $6.0 billion. The stock debuted with its initial public offering (IPO) on Wednesday priced at $22.50 per share, but it quickly fell to $19.17 after the open.

Make no mistake about it: my stock analysis is that King Digital is not worth $6.0 billion—or even half of that. The company generates about three-quarters of its revenues via the Candy Crush game. There are other games, but none have taken off to the degree Candy Crush has. While King Digital says it will look hard at developing another major game, there’s no guarantee that this will happen before interest in Candy Crush fades, based on my stock analysis.

What I suggest you do is look at more established developers of mobile games and applications that are much cheaper and not pumped up like King Digital, as my stock analysis suggests.

Based out of San Francisco, Glu Mobile Inc. (NASDAQ/GLUU) is an interesting small-cap gaming play that holds promise in the growing area of mobile gaming on smartphones and tablets, as my stock analysis indicates. Spending on mobile applications is estimated at around $56.0 billion by 2016, according to Forrester Research. With a market cap of … Read More

The Great Social Media Stock Bubble of 2014

By for Profit Confidential

Allan Greenspan Be Bearish on the Stock Market Right NowA few days ago, I woke up to news that reminded me of the “Dot-com Boom” of the late 90s and early 2000. I’m sure you remember those days—the days when any company with “.com” attached to it received a lot of attention….and a high stock price. Investors bought these stocks without any concern for non-existent revenues; forget earnings.

These days, social media stocks are the new “dot-com” wonders. We recently heard that Facebook Inc. (NYSE/FB) bought “WhatsApp,” an instant messaging application for smartphones, for $19.0 billion. The valuation doesn’t make much sense; the company has only 50 employees, 460 million monthly users, and no clear business model.

Last year, we saw Twitter, Inc. (NYSE/TWTR) do an initial public offering (IPO). On its very first day of trading, the stock price increased by more than 70%. This company lost more money in 2013 than it did in 2012. Twitter’s loss per share in 2013 amounted to $3.41 compared to a loss of $0.68 in 2012. (Source: Twitter, Inc., February 5, 2014.) But investors shouldn’t fear; in the last quarter of 2013, hedge funds got into the game and bought Twitter’s stock.

Dear reader, I’m not saying Facebook or Twitter is a sell. What I am saying is that the behavior we see on the key stock indices, especially for social media stocks, is not sustainable. It resonates with what we have seen in the past—investors pouring money into companies with no business model to generate profits.

In Allan Greenspan’s past words, key stock indices are showing signs of “irrational exuberance.”

I’m concerned about the big picture for key stock … Read More

Top Three Tech-Based IPOs to Watch for This Year

By for Profit Confidential

Where to Watch for This Year's Top IPOsThe last big initial public offering (IPO) in this country was the debut of social media play Twitter, Inc. (NASDAQ/TWTR), which has returned some staggering gains for its initial investors, in spite of an extremely obscene valuation assigned by the stock market. (Read “Two More Internet Stocks to Watch.”)

Yet in spite of the colossal overpricing of numerous IPOs in 2013, the market demand for new issues is insatiable. As we saw in 2013, IPOs are being driven upward by a market that’s looking for growth and a buying opportunity to make some quick returns.

The current bullish sentiment towards the IPO market is not to the same scale as we witnessed back in the late 1990s, when an early allotment of shares of an IPO attracted frenzied buying and a mad dash to buy the stock, even at outrageous prices.

In the current investment climate, there are several ways of playing the IPO market if you are not one of the preferred clients (the top one percent).

When the IPO is hyped up, you should always wait for the stock to come back down after its initial surge. Do not chase hot IPOs on the first or even the second day. This is especially true in cases when the IPO is showing an extreme valuation that doesn’t make sense.

Facebook, Inc. (NASDAQ/FB), for instance, traded at $45.00 on its IPO debut on May 18, 2012, but it subsequently plummeted to $18.80 on October 19, 2012. The company had more than one billion subscribers, so you knew the revenues and earnings would come once the company … Read More

Top IPOs to Watch for in 2014

By for Profit Confidential

My IPO Watch List for 2014The market demand for initial public offerings (IPOs) is strong, as investors search for additional sources of opportunities to make money.

While there have been some poor-performing IPOs this year, there have also been numerous stocks that have debuted to stellar gains. With strong market conditions for new issues, we are seeing a rise in the flow of companies wanting to come to the capital markets and take advantage of the current euphoria for IPOs. The reality is that the increase in IPOs also suggests some froth in the stock market that investors need to be careful about.

The biggest and most highly anticipated IPO this year was, of course, Twitter, Inc. (NYSE/TWTR), which has made many of its early investors rich. The stock was priced at $26.00, surged to $45.00 on its first trading day, and is currently trading at a new high above $50.00. The amazing thing is that Twitter doesn’t make money, and there’s no timeline as to when this will happen, as the company tries to monetize its users. (Read my take on Twitter in “How Small Investors Can Still Get a Piece of Twitter.”) Apparently, the stock market doesn’t really care if an IPO makes money, as long as the theoretical potential is there.

Facebook, Inc. (NASDAQ/FB) was another hyped-up social media IPO that had more than a billion users when it first debuted but hadn’t figured out how to make money from them. The stock actually fell down to the $17.00 level from its $45.00 IPO high, but this was a great buying opportunity, especially if you believe the company … Read More

Proactive Approach Is Key to Investing in This Stock Market

By for Profit Confidential

investment strategyImagine letting a losing trade run, and before you even realize it, the position is down 20%, 30%, or more. Your $10.00 stock declined 30% to $7.00; you decide to hold the position, hoping for a rebound, but deep down you know the stock would need to rally more than 40% just for you to break even. Clearly, it’s not easy when a stock falls to greater depths.

But that’s why you should take the opportunity to dump losers when the stock market rallies, as is the case at this time. Avoiding a loss is just as good as making profits.

As many of you know, I believe the stock market is vulnerable to some selling and a stock market correction, based on my technical analysis of the charts. The S&P 500 is fighting resistance to advance higher, and the Dow Jones Industrial Average, while setting anther record-high on Monday, continues to show the potential of a stock market correction of at least six percent.

Think about how the stock market has moved to these levels. The easy money policy pushed by the Federal Reserve has been a key driving force behind this four-year run-up. But now, with the Fed expected to begin tapering in December or early 2014, the focus will shift to the economy and corporate revenue growth—which aren’t so stellar. In fact, in both cases, they’re flat.

Even the surge in the initial public offering (IPO) market is a red flag in my view. When I see an IPO double on its first day, it reminds me of the euphoria that I witnessed in late 1999, just … Read More

What It Would Take for Me to Consider Buying Twitter

By for Profit Confidential

TwitterIf you chased and purchased Twitter, Inc. (NYSE/TWTR) at $50.09 on the first day of its initial public offering (IPO), you would already be looking at a paper loss of 15.5% after the company’s stock price fell to $42.32 on Friday morning. For those who chased the stock price of Twitter higher—it was the wrong move.

Twitter was initially priced at $17.00 to $20.00 and was raised when demand became euphoric. Even at $50.00, the company’s stock price was already nearly three times the initial lower range, which is astounding. (Read “2013 IPO Frenzy an Omen for the Stock Market?”)

But just like Facebook, Inc. (NASDAQ/FB), Twitter’s stock price could inevitably head much lower after all of the initial excitement fades and investors realize the company needs to make money.

I wouldn’t be a buyer now at the current stock price; I still wouldn’t be buying the company at $40.00. A decline in the stock price to the mid-$30.00 range may strike my interest, but again, I would likely want to wait until the company’s stock price fell to $30.00 or below before even considering the social media stock. At $20.00, I would seriously look at picking up some shares of Twitter. Some of you may not believe Twitter will sink that much, but just look at what happened to Facebook and Groupon, Inc. (NASDAQ/GRPN) following their strong debuts.

With social media stocks, it comes down to eyeballs—the more, the better. Facebook has about one billion users, so it is intriguing to investors. The company is working hard to monetize its user base via the use of … Read More

How Investors Can Profit from These Frightful Valuations

By for Profit Confidential

Investors Can Profit from These Frightful ValuationsThese are some scary times for holders and chasers of some of the high-volume brand-name momentum stocks, especially in the Internet services area. (Just in time for Halloween…)

While I always like to trade and follow the trend, I’m concerned with some of the superlative moves in the stock market and the resulting excessive and non-realistic valuations in the Internet area.

While I don’t want to wreck the celebratory mood on Wall Street, I highly recommend investors take a step back and really look at some of the euphoric buying we have been seeing specifically with the Internet stocks. It reminds me a bit of what happened in late 1999 and early 2000, prior to the market implosion.

We are clearly witnessing some unjustified buying in Internet stocks as overzealous traders seek profits. The problem is that the pro traders generally are a step ahead and know when to exit.

You don’t want to be caught in a massive stampede to the exits. I’m not saying it will materialize, but it’s something you have to keep in mind.

In my previous article, I discussed the upcoming initial public offering (IPO) for Twitter as it begins its road show this week, drumming up business for what will likely be its overpriced IPO and the frenzy to follow. (Read “How Small Investors Can Still Get a Piece of Twitter.”)

The current valuations I’m seeing with numerous Internet stocks in the social media space is outlandish and would make Warren Buffett shake his head. Buffett may admit to not understanding technology and the Internet, but he clearly knows a thing or … Read More

How Small Investors Can Still Get a Piece of Twitter

By for Profit Confidential

Small Investors Can Still Get a Piece of TwitterTwitter Inc. is the most highly anticipated company to debut its initial public offering (IPO) this year as it sells its story to the big institutional investors who are clamoring to buy shares. Of course, there will likely not be a lot of selling needed for its IPO, as the company will garnish immense interest.

Sorry, dear reader, but we are out of luck, yet again. A popular IPO such as Twitter is never offered to small investors. You have to have major bucks and clout with Wall Street to get in on the deal. The way popular IPOs are sold was supposed to change with opportunities given to the small investor, but it hasn’t; so once again, we are shut out as the rich get richer.

You can probably indirectly get a piece of Twitter at the IPO price via investing in funds or exchange-traded funds (ETFs) that will buy into Twitter at its IPO price. The funds buying will eventually become clearer, but a possible ETF is the Global X Social Media Index ETF (NYSEArca/SOCL), which invests in brand-name social media stocks from around the world.

Based on what we have seen so far this year, technology IPOs are hot and you can expect Twitter to likely double up on its first day from its expected subscribed IPO price of between $17.00 and $20.00 sometime in early to mid-November.

For the average investor, the hope will be that Twitter copies Facebook, Inc. (NASDAQ/FB) in its first day of trading, but I doubt that. (Read “The Plentiful Opportunities I Still See in the Social Media SectorRead More

The Plentiful Opportunities I Still See in the Social Media Sector

By for Profit Confidential

The Plentiful Opportunities I Still See in the Social Media SectorThe social media space continues to be powered by jet fuel. The gains in the Internet space have been sizzling hot, and while there has been some overdone euphoric buying, my long-term assessment continues to be bullish, given the amazing potential for advances in the Internet space.

Facebook, Inc. (NASDAQ/FB), for instance, fell to a low of $18.80 in October 2012, prior to staging a major rally to above its initial public offering (IPO) price of $45.00. Facebook has returned over 132% over the past 52 weeks, which is well ahead of the 18% advance by the S&P 500.

If you’ve been reading my column, you’d understand my positive bias toward Internet and social media stocks. (Read “Facebook Does an About-Face: Set to Move Higher?”) With over a billion subscribers, Facebook was a story just waiting to develop.

Take a look at the chart of the Dow Jones U.S. Internet Index below. The upward trend since mid-2012 has been impressive, with the index up over 60% and continuing to show bullish signs, based on my technical analysis.

Dow Jones US Internet Chart

Chart courtesy of www.StockCharts.com

The next big Internet game-changing IPO on the docket waiting to debut is social media company Twitter, Inc., which just assigned its $1.5-billion IPO listing to the New York Stock Exchange (NYSE). The company’s possible debut date has not been determined yet, but it will likely be before the year’s end.

We know that Twitter, like Facebook, has tons of users, but it’s absent of profits. However, the potential with these Internet social media stocks lies in not whether they make money, but the size of their … Read More

These Exciting Possible IPOs Should Be on Your Radar

By for Profit Confidential

IPOIn the late 90s, the anticipation of an initial public offering (IPO) was the hottest thing on Wall Street for traders. Get in on the pre-IPO allotment, and chances are you would make tons of money. I still recall the frenzy that surfaced after an IPO, especially from technology stocks.

Fast-forward a decade, and the market anticipation for IPOs is not as frenzy-like. Now traders are more careful to buy into IPOs after their initial debut.

The key to success in investing in IPOs today is patience. Even if an IPO skyrockets after its debut, it is often prudent to wait for a pullback or for the lock-in period to expire before buying, as this is when the initial investors, such as funds and institutions, can sell their shares in the stock market.

A great example of a former IPO star that opened at a high price but subsequently faltered was Internet stock Groupon, Inc. (NASDAQ/GRPN); the stock traded above $30.00 on its November 4, 2011 debut, but fell to as low as $2.60 a year later on November 12, 2012. I looked at the stock as a decent risk-to-reward play, and now the stock has been sizzling on the charts, up 332% from its November 2012 low. (Read “Why There’s No Stopping the Internet Sector.”)

Another example of a highly anticipated Internet IPO was Facebook, Inc. (NASDAQ/FB), which traded as high as $45.00 on its debut on May 18, 2012, and subsequently plummeted to $18.80 on October 19, 2012. But with over one billion subscribers, I considered Facebook to have excellent potential—if the company could monetize its … Read More

This Hot IPO Still Worth Following After Major Market Upswing

By for Profit Confidential

IPOWhile valuations are almost always stretched in the world of new listings, there have been some very attractive companies come to market over the last twelve months. In fact, there have been all kinds of initial public offerings (IPOs) lately, which is no surprise with a stock market around its record high.

It’s a tough task trying to keep track of them all along with the action in the broader stock market. In this column, I’ve looked at several successful IPOs, but I recently came across an interesting technology growth story that’s in the right business at the right time.

The company is Rally Software Development Corp. (RALY) out of Boulder, Colorado. The company listed on the NASDAQ in April of this year and was an immediate success on the stock market (reasonable valuations are triumphed by high expectations in the world of IPOs). The company’s stock chart is featured below:

Rally Software Development Corp ChartChart courtesy of www.StockCharts.com

Successful IPOs are not only wealth creators for selling and new shareholders; they typically identify growing companies with growing institutional interest. It’s tough these days to find genuine growth in the business world, so successful IPOs, for me, immediately suggest an enterprise that the marketplace wants over the rest of the stock market. It’s always difficult to get shares in the hottest IPOs; therefore, they are worth adding to your watch list afterward. (See “Startup Company with Innovative Trend Has Real Staying Power.”)

Rally Software is in the business of selling cloud applications for Agile software development (collaborative software development methods for teams). In April, the company sold 6.9 million shares … Read More

Timing Is Everything for This Hot IPO

By for Profit Confidential

Timing Is Everything for This Hot IPOWhen the stock market is going up, there are always initial public offerings (IPOs). Timing, as they say, is everything.

But with a meaningful trend (like the stock market breakout experienced this year), you can make good money speculating in IPOs, even if you can’t get an allocation on the hottest deals.

One small, but fast-growing company that’s been a hot performer is SolarCity Corporation (SCTY) out of San Mateo, California. It’s been one of the best-performing IPOs since listing. The company’s timing could not have been more perfect.

This business is more than just a solar panel company. It is a full service installer and repair service company that guarantees electricity production to customers.

With net proceeds of approximately $95.0 million from the sale of approximately 13.2 million shares at $8.00 per share, this growing company is in full expansion mode.

It has also had fantastic stock market success so far, and it’s worth keeping an eye on (especially since Elon Musk from Tesla Motors, Inc. [TSLA] is the company’s chairman).

Before listing, the company raised over $100 million in private equity to fund its growth. The company has a burgeoning customer base among large corporations and the U.S. Armed Forces.

By May, $8.00 a share quickly became $50.00 a share, which isn’t bad for six months’ work. Extreme overvaluation is part of the game with IPOs, especially the ones that become immediately successful right after listing. (See “How Peter Lynch Got It Right 20 Years Ago.”)

Extreme price momentum with IPOs is very much a stock market reality when the key stock indices are … Read More

Why There May Be an Insatiable Appetite for Chinese IPOs

By for Profit Confidential

Insatiable Appetite for Chinese IPOsThe Chinese are coming! Well, not really, but we did see the first Chinese initial public offering (IPO) of the year list on an U.S. exchange yesterday and only the third Chinese IPO since 2011. The pipeline has dried up from the 60 or so Chinese IPOs listing in the U.S. from 2008 to 2011. And whether the flow will start again is questionable, as I doubt it will happen.

China-based shopping center LightInTheBox Holding Co., Ltd. (NASDAQ/LITB), an online seller of apparel and other household goods to the world market, is the top Chinese online retailer as far as sales to customers outside of its country’s borders. The company, sometimes seen as the little “Amazon.com” of China, was started by Alan Guo, who was previously an executive at Google China. The company priced 8.3 million shares at $9.50 (the mid-point). The deal was hot due to the absence of IPOs coming from China. The stock surged 34% to an intraday high of $12.69 prior to settling at $11.61 for a market cap of about $470 million.

The strong buying in LightInTheBox indicates the demand for Chinese IPOs that are deemed to be trustworthy. The other two Chinese IPOs that debuted in 2012 have done well—online discount retailer Vipshop Holdings Limited (NYSE/VIPS) and social media company YY Inc. (NASDAQ/YY) are up a whopping 340% and 150%, respectively, from their IPO debuts.

At issue have been the numerous cases of fraudulent financial reporting by Chinese companies listing in the U.S., since these companies were not subject to U.S. reporting requirements with many listing on the bulletin board and pink … Read More

Facebook Does an About-Face: Set to Move Higher?

By for Profit Confidential

Facebook Does an About-FaceFacebook, Inc. (NASDAQ/FB) has attracted over one billion pairs of eyeballs, and my stock analysis suggests its share price may really explode upward if the company can monetize this massive user base. The future for the company will clearly lie with its aggressive shift into mobile advertising, an area that numerous companies, including Google Inc. (NASDAQ/GOOG), are trying to control, based on my stock analysis. (Read “Google Could Be the First $1,000 Stock.”)

The problem with Facebook is that it needs to have better control over its social networking platform. My stock analysis suggests this could only happen if the company can more effectively integrate its product into the operating system of a smartphone, which appears to be the case, as Facebook is expected to launch a new “Android”-based product. The speculation is that a Facebook phone will be produced by HTC Corporation and will focus on the integration of Facebook. (Source: Ortutay, B., “Eyes on Facebook mobile event as company evolves,” Associated Press, April 4, 2013.)

In the article, the potential stakes for Facebook and other companies in social networking are growing exponentially. Spending on U.S. mobile advertising is estimated to surge 77% in 2013 to $7.29 billion, according to eMarketer. Facebook is estimated to corral $965 million.

Based on my stock analysis, I like the company’s focus on pumping up its mobile advertising area. In the fourth quarter, mobile revenues accounted for 23% of Facebook’s total $1.33 billion in advertising revenues, up from 14% in the first quarter. The interesting number was the company’s total mobile monthly active users, which came in at 680 million in … Read More

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

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We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.

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