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
Trading Success with Candlestick Technical Analysis
This article explains how to succeed in trading using candlestick technical analysis.
Stock Market Day Trading Experiences
This article covers day trading experiences examining what works and what doesn’t work. Many similarities exist between day-trading and short-term inter-day trading.
State of the Economy and the Stock Market Outlook
This article examines the state of the stock markets as economic conditions transpired over the past year and how to deal with the outlook for recovery.
Trading on Support and Resistance plus Trend Reversals
This article examines the technical analysis indicators for support and resistance and trend reversals. Knowing how to identify and apply these will translate into a valuable tool for your trading success.
Trading with a Trend Following System
This article provides insights into the thought process of a person engaged in learning about stock market trading.
