After Fridays for many disappointing IPO of Facebook the discussion if we are headed for another tech bubble has heated up again. Just from looking at recent IPO’s and the constant over valuating of tech companies it might seem that we are indeed headed into that direction.
However, the fact that Facebook didn’t explode on the first day of trading only means one thing. Demand and market evaluation of the stock was done correctly! This does not happen very often and therefore might come as a surprise to many investors and casual bystanders.
The question is how will the stock develop now? Are we in for a nose dive like Groupon and other tech startups or will we see a more steady and slow growth like LinkedIn?
My prediction is simple – the stock go down and wobble around the 30$ mark until 90 days from now – at that point the “insiders” are allowed to trade their stock and the price will go down considerably – possibly the low twenties. This is the time to buy, as from then on it will be going up for a long time. Facebook's monetizing strategy will become much clearer and possible alternatives (looking at you G+) will lag more and more behind to be seen as real threats to Facebook.
So this is not a bubble, just the market valuating a stock based on actual facts relevant to the market.