This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

'China's Facebook' Is Ready to Break Out

Stocks in this article: FB RENN UBS C KCG

By Dave Goodboy

NEW YORK ( TheStreet) -- "They need to get rid of founder Mark Zuckerberg. Facebook (FB - Get Report) may have a chance if a talented leader is appointed; otherwise it's a no-go. The guy is a master at the start-up, but he needs to turn the reins over to someone else to run the company," exclaimed an under-the-radar Internet insider with whom I recently chatted in South Florida.

His words proved semi-prescient as the heavily anticipated Facebook initial public offering has gone down in history as providing the worst return of any large IPO in the past decade.

The massive $16 billion IPO was fraught with issues from its launch on May 18. A lack of communication at Nasdaq appears to be the initial trigger of the strife, causing the IPO to be delayed. Some investors complained that their orders weren't being filled or they were getting shares at a much higher price than they wanted.

The confusion resulted in about $115 million in losses for the four major market-makers in the IPO: Knight Capital Group (KCG), Citigroup's (C) Automated Trading Desk, Citadel Securities and UBS (UBS).

The exact steps taken by Nasdaq officials on the IPO's first day are still unclear. However, the losses suffered by investors and the market-makers are very real. This has triggered a rash of shareholder lawsuits against the social media behemoth.

Obviously, it wasn't Zuckerberg who caused the initial confusion. But time will tell if he can help solve the problems or if a new leader needs to take over.

Either way, it looks like it's going to be a long and revealing road to get to the bottom of exactly what went wrong with the IPO. But one thing is for certain: Facebook's flop pulled down the entire social media sector, potentially setting up a great buying opportunity for savvy investors.

The Facebook of China

While the lawyers are sorting out Facebook's troubles, otherwise successful social media companies have been knocked down into bargain territory. One of these is Renren (RENN).

The so-called Facebook of China nearly doubled in 2012 prior to the Facebook flop. As you can see, shares plunged into the $4 range in sympathy with the Facebook selloff. However, the price appears to have stabilized and may be beginning to climb higher.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs