LitheInvestments'  Instablog

"Groupon GRPN fell so hard today that there were tripped circuit breakers to limit the ability to short the stock." -Bloomberg news

Groupon's IPO, down over 62% in value since it's debut 6-7 months ago, took another big hit today falling nearly 9% in value as it's lock-up period expired yesterday whereas now founding owners of the company can now legally sell their shares.

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Are these IPOs heavily mismanaged? With at least two increases in the IPO's initial value for Facebook(FB) when it was first released, one has to wonder where these values made up out of thin air?

Greed is to play here, the street simply wanted to get way too much for them and the the price action was unsustainable. These are excellent companies, more so with Facebook with strong increasing earnings from ad revenues and an upcoming lucrative mobile ad market.

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With Facebook this lockup period is even shorter, just 90 days from the company's IPO release direct owners will be able to sell their shares on the open market putting further fears and negative pressure on the already injured IPO.

90 days is simply too short for a lock up period, that's just 8 trading weeks from now. While one can argue the business model of Facebook looks more enticing and lucrative, no one can ignore the negative pressure that a lock up release petrifies the price action with after Groupon's disastrous trading Friday.

It's not that Facebook is a bad company, the IPO's initial price and lockup period terms were heavily mismanaged. As this 8 week period comes closer, more negative pressure from the lockup creates a short position opportunity. Look for shorting opportunities within the next 6 weeks for FB.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.