WINDERMERE, Fla. ( Stockpickr) -- The IPO market is picking up again, and there is big money to be made trading new issues.
Nothing illustrates this point more than the recent IPO success of the U.S.-based social networking site LinkedIn (LNKD) and Russia's search engine king Yandex (YNDX) (the Google of Russia). Both stocks priced at the higher end of their ranges and saw very respectable gains in their initial showings.
Traders jumped all over these two stocks off their IPOs because there just are not a ton of pure plays on social networking that currently trade in the market. If you missed trading these stocks on their debut, don't worry -- we have plenty more social networking plays in the pipeline that are either slated, or rumored, to come public very soon.
Some of the social networking names that traders should watch for IPO news and rumors about in the coming weeks and months are Zynga, Twitter, Groupon.com, Zillow, PopCap, Pandora and Facebook. Let me be really clear here: I expect to see huge trading opportunities in all of these names, if and when they IPO. The momentum money wants in to the social networking space, so I would advise riding this trend with them. Do not fight it.I know a lot of traders who want to short LinkedIn already, now that the stock is optionable and shares are available for shorting. That trade might work for a bit, but with such a small float, I bet it sees a huge short squeeze that takes it back above the IPO high of $122.70. I understand the valuation argument, but when everyone wants to short something, rarely does the stock do what the crowd wants. I just read a report from Bloomberg that said the cost to borrow LinkedIn shares could be as high as 60% of the value of the shares on an annualized basis. Good luck, shorts. Related: Stocks to Play a Social Networking Bubble Zynga, a leading provider of social and mobile games such as Mafia Wars and FarmVille, is expected to file IPO paper work any day now. Some think the market will value the IPO at over $10 billion, and even possibly $20 billion if LinkedIn was any guide. It's been rumored that both Morgan Stanley and Goldman Sachs Group have been approached as possible candidates to lead the IPO. I expect this stock to make a big move when it IPOs because it hits on two major trends: social networking and online gaming. Both of these markets are booming right now and are red-hot. If you have a Facebook account, you know what I'm taking about. You have seen your friends wasting hours a day playing popular Zynga games such as Zynga Poker, Cafe World and World Twist. All of that time has equated to an unbelievable $850 million in revenue last year. Cleary, Zynga found a way to reap huge profits off of the lazy. That's a trend I doubt changes anytime soon. With all of this in mind, it's time to jump into some gaming stocks ahead of the Zynga IPO. If Zynga comes public and gets anything near the valuation I am expecting, than I think the entire gaming sector is going to be lit on fire. Here's a look at a number of gaming stocks that could soar ahead of a Zynga IPO.
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