The Freeserve gold rush will not happen just yet for many consumers who invested in the free Internet service provider, despite the share price rocketing on their stock market debut this week.
Freeserve shares opened at 150 pence on Monday afternoon and within minutes jumped to 237.5 pence, then settled to 204 pence by close. At midday today share Freeserve shares were trading at 200.5 pence.
But trading this week has just been for institutional investors. Trading for private investors will officially begin on Monday, although trading is available to smaller investors under more risky 'conditional trading' - where shares are traded ahead of certificates being issued.
The Freeserve share offer was around 30-times over subscribed. Of the 50,000 individuals who applied for shares, 42,000 got shares, but only 40 per cent of them got the share allocation they requested.
Consumers who had their share allocations scaled down will be sent refund cheques with their share certificates and can start trading next week.
Brokers such as Barclays Stockbrokers has barred the majority of its customers from dealing Freeserve shares on the conditional market this week because they believe it is far to high a risk.
Elizabeth Klein, a brokers with Barclays told Newswire that it is allowing small Freeserve investors to buy, but not sell unless they are in possession of a share certificate or have details of a nominee account where they are held.
"It is far to risky for them to deal if they don't know that they have shares on the conditional market," she explained. "We are protecting them from that risk."
Klein admitted that retailer investors may have lost out to an extent, thanks to institutions buying stock to "punt" or sell within a few days which has caused the share price to fall. "This is not unusual for a deal that is structured in this way," she said.
Klein expects the Freeserve share price to start flattening out. "It is normal for net stock to go down and slowly up again," she said.
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