I’m extremely bullish on the future of Facebook, however I think there is a strong case for shorting their shares at the IPO. The reason why is very simple. Look at what has happened to the shares of the companies in their peer group since their IPO’s:
You would have made money shorting each of these stocks on their first day and each has traded at below their opening price multiple times since their IPO.
If you had planned to invest in any of them, there was no rush to do so. There is no reason to believe Facebook will be any different. If hype and demand gives the stock a quick pop, that profit will go to those lucky enough to be able to buy pre-IPO shares. That is what happened to LNKD. However anybody who bought shares at the open would have gotten burnt badly after the stock immediately tanked.
FB will very likely be a similar story. Shorting it at the open is almost certain to result in a profit at some point in the hours, days, weeks or months that follow. Likewise, buying shares on the first day will likely not be the optimal time to do so if you plan to be a long term investor.
Disclosure: I am a Zynga shareholder and plan to buy shares of Facebook at some point after their IPO. I am not and have never been a shareholder of Pandora, Groupon or LinkedIn.