Will Facebook’s IPO make E*Trade Party like it’s 1999?
Talking babies notwithstanding, Etrade has seen better days. It’s the rare company that got clobbered by Web Bubble 1.0 and the ownership of subprime debt. Here’s a chart of its all-time performance:
Facebook recently added Etrade as an underwriter along with usual suspects like Goldman Sachs, Morgan Stanley (lead underwriter), Citigroup, J.P. Morgan, Bank of America, Wells Fargo, Barclays and Credit Suisse and a whole host of smaller firms like Lazard and Muriel Siebert & Co. Inc. (see all 33 names are here). Separately Charles Schwab and TD Ameritrade will be able to grab shares for select clients but won’t be official bookrunners.
For the newbie investor desperate to buy Facebook at IPO, setting up an Etrade account seems likely the only hope to get rich off that first day pop. I’m not going to opine here about the wisdom of following the crowds but I’ve been emailing with lots of young people in the last month asking the most basic of questions about the IPO process. Without exception all of these kids use Facebook (duh) and are old enough to remember Google’s IPO. And I expect that Etrade is signing up lots of new accounts with the promise of a lottery ticket—a 50 share Facebook allocation.
Between now and Etrade’s Q2 earnings call on July 20th (same day Dark Knight comes out, FYI) I’ll be watching the stock closely to see if it catches a bid. And even though retail brokerage churn numbers are always grotesque, I’ll be paying attention to number of customer accounts and if its spiked sharply from the 4.4 million this quarter. Etrade playing on 1999-level expectations, if not hitting a 1999-level market cap, is another Web Bubble 2.0 indicator you should keep on your trading radar.
And as I’ve told all the people who’ve asked me about it for the last year — and I can tell you that a lot of people, young and old have asked me about getting into the Facebook IPO — If you can get a decent allocation below or around $35 a share, I do think you’ll get a chance to sell that stock at a higher price. Always a risk, but at least for the IPO, I’d rather be long Facebook than not.
