Stock Trading in Private Companies
There are a number of social media networking companies that are enjoying tremendous success as private companies i.e. they are not listed on the public stock exchanges. With the success of companies such as Facebook, Twitter, Zynga and LinkedIn, a secondary trading market has developed to engage in the trading of shares of these privately-held companies.
In the past year (2010), several private exchanges have emerged to match up the buying and selling of private shares in these fast-growing companies which have enjoyed hundreds of millions of dollars of revenue. The trading volume has been relatively low but the number of share trading transactions is increasing each month. Wall Street brokerage firms have formed investment pools to buy up shares.
The shares come mainly from former employees at the companies and from venture capital investors who want to take an early exit to capitalize on their stake in the company. Buyers of these shares include wealthy speculators looking for a piece of the action in the next big thing. This buying activity relating to Facebook is mentioned in the Google, Yahoo, Facebook Revenue article.
As these companies take longer to tap the public markets by delaying their IPO (Initial Public Offering), pent up demand is created. This demand has fueled the creation of these secondary market exchanges to engage in trading of shares in these private companies. Examples of these exchanges include:
- SharesPost
- SecondMarket
Facebook valuation is $42.4 billion and for Twitter valuation is $3.6 billion as implied by the pricing on the private company share exchanges.
More you might like
Candlestick Technical Analysis : An Introduction
This article provides an introduction to Japanese candlesticks – what they are, how they are used in charting and the technical analysis of candlestick patterns.
Emotion Dominated Stock Trading
This article examines the domination of emotions over stock trading actions. Even if you know what to do, your inability to suppress emotions will lead to bad trading results.
From Long-Term Investing to Short-Term Trading – How to Profit on the Stock Price Rise and Drop
This article presents the notion of migrating from a long-term buy-and-hold investing strategy to a short-term profit-making trading style, capitalizing on the rise and drop of the stock price (following the trend and profiting on the cycles).
Impact of Personality Influences on Stock Trading
This article examines the impact of personality influences on stock trading activities and what can be done to control such influences on stock trading.
A Trend Following Method to Guide Your Stock Trading Buy/Sell Decisions
This article examines the elements of successful stock trading. A stock trading method to execute winning trades and to achieve trading success. A trend following system based on candlestick technical analysis.
