There were all sorts of warts on Chinese Facebook (not really) Ren Ren (RENN) when it came public. [RenRen IPO Appetite Seen Huge, but Red Flags Abound] This did not stop the investment bankers from gifting their best customers with shares that could be flipped to the public in the low to mid $20s on IPO day. While a complete bust, breaking below its IPO price of $14 within a week or two [May 10, 2011: Thus Far RenRen a Bust] While impossible to catch a falling knife, those who were genius enogh to buy at $6 could have made 100% in just under 2 weeks with a perfect entry and exit. For the rest of us mere mortals, a nice opportunity to skim 20-30-40% in a very short period of time also existed.
A price around $8 to $10 was most likely far more reasonable to come IPO at, and without the hype of the first day pop, would have led to a far more stable course for the stock. But the larger point is, there is a valid price point for everything - unfortunately, a lot of people learned that the hard way on this one.