The latest rage for investors appears to be for trendy internet service companies like LinkedIn (LNKD) and Pandora (P).
Both LinkedIn and Pandora saw their stock prices climb on that first day of trading. LinkedIn got as high as $122.70 on that initial day and traded as low as $86.67 on the first day of options trading a week later. Pandora rose to $26 on its opening day and traded as low as $13.02 a week later.
Standing on the sidelines watching things shake out may sometimes provide an opportunity. The purchase of call options shortly after the IPO may be an alternative to an outright purchase of the stock. The most you can lose with a call option is the premium paid.
Upcoming IPO’s may include Facebook, online social game company Zynga and online coupon company LivingSocial. Is it possible they too will look the prettiest on the first date of trading? If the glamour temporarily fades on an IPO you may be able to get in at an attractive price after all of the initial excitement wanes.