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This Stock Has Most to Lose from Facebook IPO: Top Analyst

The Street is buzzing about the potential of a Facebook IPO coming as soon as this week.

“I'm hearing talk that Facebook pricing will be somewhere between $38 and $42,” reveals trader Josh Brown, author of The Reformed Broker blog.

At that level, the stock could be accessibly priced for not only pro traders but retail investors, too.

And top BGC analyst Colin Gillis tells us, of all the money that could rotate into Facebook, Yahoo! has the most to lose.

“When Facebook comes out of the gate they’ll be considered a growth company –and as a growth company investors will be watching top line revenue growth – so Facebook will need to put the pedal to the metal and drive revenue,” he says.

And he expects Facebook to do that by chasing brand advertising. “That’s the easiest bucket of dollars for them to get – and that’s going to hurt Yahoo!” Gillis says.

"Keep in mind brand budgets tend to be fixed, so for Facebook to grow they'll need to take dollars away from rivals."

That’s not to say Google will go unscathed. Gillis also thinks Google will tale a hit, but only for a short while.

In the near term Gills fully expects money to rotate out of Google and into Facebook because cyclically Google is a second half story. However, by holiday season he thinks Google will be back in the sweet spot.

“Google’s performance advertising picks up ahead of the holiday season,” he says. “Facebook is less suited for performance advertising. Personally, I’m not going to go Facebook and book and airline ticket.”

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He goes on to say, “Google is still the number 1 search engine out there,” and at the end of the day Google is more likely to hurt Facebook than Facebook hurt Google.

Trader Jon Najarian adds that if Google sells off after facebook IPO, he would consider the pullback and opportunity. "Personally, I wouldn't dump out of Google," he says.





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Trader disclosure: On Jan 27, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; P. Najarian is long AAPL; P. Najarian is long Long BAC calls; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long MSFT; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long CROX callsl Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns WFT; Grasso owns XLU; J. Najarian is long CBOE; J. Najarian is long CME; J. Najarian is long CIGX; J. Najarian is long SPLS puts; J. Najarian is long AAPLS call spreads; J. Najarian is long RIMM call spreads; J. Najarian is long GLD call spreads; J. Najarian is long CROX call spreads; J. Najarian is long TXT call spreads; J. Najarian is long WLT call spreads; Brown is long AAPL; Brown is long JPM; Brown is long IBB

For Steve Grasso:
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own CUBA
Stuart Frankel & Co and it’s partners own GERN
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own HSPO
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own NYX
Stuart Frankel & Co and it’s partners own PRST
Stuart Frankel & Co and it’s partners own WFT
Stuart Frankel & Co and it’s partners own XRX

For Colin Gillis
(YHOO) Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Google within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Google.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Microsoft within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Microsoft.
Lead or Co-manager: BGC Financial LP and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for Yahoo within the last 12 months. BGC Financial LP and/or its affiliates has not received compensation for investment banking services in the last 12 months from Yahoo.
(GOOG) Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report.

For Edward Zabitsky
No disclosures

For Abigail Doolittle
Doolittle is long SSO
Doolittle is long SDS
Doolittle is long FAZ

For Pierre Ferragu
(RIMM): I, Pierre Ferragu, Senior Analyst(s)/Analyst(s), certify that all of the views expressed in this publication accurately reflect my/(our) personal views about any and all of the subject securities or issuers and that no part of my/(our) compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views in this publication.

For Kimberly Greenberger
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: Abercrombie & Fitch Co., Express, Inc., Guess, TJX Companies Inc.

Morgan Stanley & Co. LLC makes a market in the securities of Abercrombie & Fitch Co., Aeropostale Inc, American Eagle Outfitters, Inc., AnnTaylor Stores Corp, Chico's FAS Inc., Children's Place Retail Stores Inc., Coach Inc, Express, Inc., Gap Inc, Guess, Limited Brands Inc, Lululemon Athletica Inc., Michael Kors Holdings Ltd, Ross Stores Inc., Tiffany & Co., TJX Companies Inc., Urban Outfitters Inc.

Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of Gap Inc, Limited Brands Inc, TJX Companies Inc..

For Nik Modi

1. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of the following companies' common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end): Energizer Holdings

2. The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Altria Group.

3. The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Procter & Gamble Co.

4. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: Procter & Gamble

5. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.: Procter & Gamble

6. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: Procter & Gamble

7. Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: Procter & Gamble




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