As many people have probably noticed, there has been significant buzz and speculation flooding the blogs and news sites over this upcoming Friday's release of Facebook's IPO on the Nasdaq. Many financial pundits predict catastrophe and a second dotcom bubble bursting in the market, and expect Facebook's performance to mirror the struggles that have crippled recent tech companies that entered the market over the past 12 months (Groupon & Netflix). A few, on the other hand, see Mark Zuckerberg's darling of the Internet as a stock that could pop like Google did.

Whether you are avoiding the IPO altogether, aiming to try and buy a few shares at the retail level or simply sitting on the sidelines observing Friday as a historic day for the tech industry (as the IPO will be the largest one released in history), May 18 will unmistakably see some interesting activity, with the following likely to occur.

SEE: Evaluating The Facebook IPO

Price Surge
Unless you're rubbing shoulders with major underwriters and have bought pre-IPO stock, or have a few million lying around in your investment account waiting to be invested, it will be incredibly difficult to purchase shares of Facebook as a regular investor when it immediately hits the market - especially at $28 to $35 per share.

When LinkedIn released its offering to the public, it saw market volume within the millions, and after its shares were released at $45 a pop, the stock's price surged to above $100, before settling on $94 at close. Investors bidding for the stock on that day, hoping to grab the initial offering price, saw ask prices swiftly move north as the day progressed. Undoubtedly, an IPO as prolific as Facebook will see similar movement.

SEE: Alternative Ways To Invest In Facebook

Noise Trading
Due to its household name value, Facebook will also likely attract inexperienced investors who want to get in on the action at the discount brokerage level. Earlier this month, E-trade was added as the 33rd underwriter for the IPO, allowing clients with smaller assets, many of whom may be less-sophisticated investors, to hop on the bandwagon. It also gives day traders the ability to dive into the fray, causing significant amounts of noise during the first trading day. Traditionally, noise traders are often associated with price escalations leading to a bubble, forcing the price of a stock to deviate beyond its fundamental value. For a company with a name as ubiquitous as Facebook, it goes without saying that there will probably be a few noise traders in the mix.

SEE: How Facebook Beat MySpace

Large Volume
There will be numerous players vying for position to cut a slice out of the social media giant, with funds and high net-worth individuals the most visible contenders for the company. The hype behind the IPO will likely cause significant movement in the stock's volume of outstanding shares, as Facebook insiders cash in their shares in the company and release them to the public. Among the individuals who will be scooping them up include Apple co-founder Steve Wozniak, who stated during an interview with Bloomberg this past weekend that he plans on buying shares of the company, regardless of price. Expect to see a record-breaking volume of shares exchanging hands later this week.

SEE: 6 Career-Killing Facebook Mistakes

New Millionaires and Billionaires
Insiders at Facebook include not only Zuckerberg and the venture capitalists who helped start up the company, but celebrities, employees and contract workers who helped the growth of the site. Graffiti artist David Choe, who was commissioned to paint the murals adorned in Facebook's Palo Alto offices, chose stock over a cash fee for his work. When the company hits the markets, the stock compensation Choe accepted will net him approximately $200 million. Moreover, U2 front man Bono possesses a stake in Facebook that, when the IPO hits the market, will be worth up to $1.5 billion - more than he ever earned during his musical career.

SEE: The 5 Biggest Investors In Social Media

The Bottom Line
Valued at nearly $100 billion, Facebook's IPO is tentatively worth close to half the market cap of Wal-Mart and more than the capitalization of Disney. Whether or not Facebook will live up to its hype, the fact remains that this week will be a tremendous event in the history of the IPO market.

Related Articles
  1. Investing Basics

    Inside IPO Roadshows

    Understand more about IPO road shows. Learn the reasons why an IPO road show is important for the success of a company's public offering.
  2. Stock Analysis

    If You Had Invested Right After Berkshire Hathaway's IPO (BRK.A)

    Learn how much you would now have if you had invested right after Berkshire Hathaway's IPO, and find out the classes of shares that you could invest in.
  3. Stock Analysis

    Is Now the Right Time to Buy Coty? (COTY)

    Find out whether fragrance and color cosmetics powerhouse Coty deserves a place in your portfolio. Will recent acquisitions help turn the company around?
  4. Charts & Patterns

    How To Use Volume To Improve Your Trading

    The basic guidelines to analyzing volume may not apply in all situations, but overall, they can help direct entry and exit decisions.
  5. Stock Analysis

    Moderna Therapeutics: An IPO Candidate in 2016?

    Find out the reasons why 2016 may be the year when highly valued biotech company Moderna Therapeutic files for an initial public offering (IPO).
  6. Stock Analysis

    Domo Inc: An IPO Candidate in 2016?

    Learn about key information on Utah-based technology startup Domo Inc. and how the Domo dashboard differentiates itself in the world of business intelligence.
  7. Stock Analysis

    GoDaddy Inc: How It's Fared Since the 2015 IPO (GDDY)

    Evaluate GoDaddy's stock performance since its April 2015 IPO, and determine how you would have fared had you invested in the company on day six.
  8. Stock Analysis

    If You Had Invested Right After Comcast's IPO (CMCSA)

    Evaluate how Comcast's stock has performed since the company's 1972 IPO, and learn how you might be a millionaire today had you invested a small sum in the IPO.
  9. Stock Analysis

    TransUnion - How It's Fared Since the 2015 IPO (TRU)

    Learn about the business of financial services company TransUnion and how the company's stock fared after its initial public offering in 2015.
  10. Chart Advisor

    ChartAdvisor for January 29, 2016

    A weekly technical summary of the major U.S. indexes.
RELATED FAQS
  1. When did Facebook go public? (FB)

    Facebook, Inc. (NASDAQ: FB) went public with its initial public offering (IPO) on May 18, 2012. With a peak market capitalization ... Read Full Answer >>
  2. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  3. What kind of assets can be traded on a secondary market?

    Virtually all types of financial assets and investing instruments are traded on secondary markets, including stocks, bonds, ... Read Full Answer >>
  4. Why would a company decide to utilize H-shares over A-shares in its IPO?

    A company would decide to utilize H shares over A shares in its initial public offering (IPO) if that company believes it ... Read Full Answer >>
  5. How do I place a buy limit order if I want to buy a stock during an initial public ...

    During an initial public offering, or IPO, a trader may place a buy limit order by choosing "Buy" and "Limit" in the order ... Read Full Answer >>
  6. How do corporate actions affect floating stock?

    Corporate actions, defined as a company's actions that affect the amount of outstanding company stock shares, can either ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center