I’m sure you have all heard about the upcoming MULTI-BILLION Facebook IPO. According to news report, Facebook Inc is on track to issue the IPO by the 18th of May this year.
The business world is abuzz with the news and speculation is rife about the offer price for the IPO, with estimates ranging from 30 to 50 dollars a share. Mark Zuckerberg, founder of Facebook Inc has valued the tech company at around a whopping 100 BILLION DOLLARS!
To compare, take Google Inc for instance; Google shares are trading at an average of 600 dollars per share on the NASDAQ with a total market cap of about 200 BILLION DOLLARS.In other words, one could speculate that the average share price of Facebook could reach as high as 300 dollars per share, maybe more.
So Facebook shares are very hot and everyone will want to get their hands on some, and so we come to the topic of my post: “Beware Facebook IPO Scams“. As Facebook Inc nears the date of its IPO, many unscrupulous individuals will want to take advantage of the hype. I personally have been approached by a certain individual claiming to be from some securities brokerage firm.
So this guy calls me up on my cellphone and introduces himself as a stock broker and says that he has Facebook shares to sell. Of course I was excited to hear that and so listened to his sales pitch. He was going to sell me 100 shares of Facebook at about 35 dollars a share. He tells me that he expects the shares to go up as much as 150 dollars a share within two to three months of the opening day.
Needless to say I was very excited as I could easily quadruple my money in a period of two to three months. He emailed me some forms for me to fill out and said that I have another 2 working days to complete the payment. Once I had the forms and went over them, I began to have doubts. There was no listing of the firm’s name in the SEC or FINRA website. The website address he gave did not reveal any kind of licenses of any sort. Alarm bells started ringing and I knew something funky was going on.
According to SEC regulations, you have to be a qualified investor to be able to invest in IPOs. Simply put, you need to have a net worth of at least One Million Dollars and have an annual income of at least 200K. Obviously I don’t have a net worth of USD One Million nor do I have an annual income of USD200K. Not yet anyway (here’s hoping).
So if you are approached by certain individuals or stock brokerage firms be sure to double check with the SEC and FINRA and always do your research. The question to ask is “Why me?” and if you never have any history of trading shares on the NYSE or NASDAQ, more often than not its a scam. The old adage of “if its too good to be true..” should always be kept in mind when dealing with dubious investments.
So be warned readers, and remember: A fool and his money will soon be parted.