Why Facebook Stock is doing a Faceplant

Shah Gilani

Forget all the hype.

And you can even forget that I told you Facebook was a hyped-up offering, and that I would sell my shares if I was an insider, and that I definitely wouldn't buy the IPO on its first trading day.

Did you listen to me?

If you didn't, and you own Facebook stock (Nasdaq: FB), here's what you have to worry about.

The Facebook Stock Concerns

First, did you get your confirmation? Probably by now you did.

But the problems that NASDAQ OMX Group had sending out electronic trade confirmations in the heat of trading on Friday were staggering. (They eventually went "manual" on the opening day of the biggest tech offer ever on the biggest tech exchange in the world… how ironic… manual.)

There's nothing out there, nothing anywhere about who or how many people did or didn't get confirmations or when they got them. There's nothing out there because the exchange is panicking, and if thousands of confirms, or tens of millions of shares, are up in the air… well imagine what could happen.

Imagine all the trading problems that are out there with Faceplant shares. Imagine you wanted shares, didn't get a confirm that you bought shares, and you put in another offer to buy shares.

Imagine you now own double the number of shares you wanted, but still don't know that you own any. Imagine you bought at the high, maybe $42 and change, and imagine instead of rising well above that price, the stock fell back to its IPO price of $38, and only didn't fall below that because the lead underwriter Morgan Stanley (thank God it wasn't JPMorgan (NYSE: JPM)) had to spend billions supporting the shares to keep it from becoming a disaster IPO.

Okay, you don't have to imagine the last part of that, because that's what really happened. And, actually, you don't have to imagine any of that stuff actually happening, because it did happen.

Now, here's the thing.

The market had a really bad week. (You should be happy if you bought the protection I suggested previously; my subscribers are up triple digits on some of those hedges.)

But if today, Faceplant buyers who have stock they didn't want, want to sell it, and there may be a lot of them, the question I have is, what will the Facebook stock price do?

If it falls, that means the underwriters aren't supporting it. That will be a disaster, not only for Faceplant, but for the market.

[As of 10:30 a.m. EDT, Facebook shares had slipped about 11% to just under $34.]

We've got a heavy week ahead of us. Don't blink. This upcoming week may make or break you and the market.

Let's hope not.

Related Articles and News:

• Money Morning:
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• Money Morning:
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• Money Morning:
  Facebook's IPO Price Too High? Not For The Woz
• Money Morning:
  Facebook IPO Price Range Values Company Near $100 Billion
• Money Morning:
  Facebook IPO: Where's the Love, Mark Zuckerberg?

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Shah Gilani

About the Author

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Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains.Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

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