Would you buy Facebook stocks next year? It may seem like a win-win in the eyes of amateur investors. One of the hottest social networks on the planet with a valuation of $100 billion. Who wouldn’t want to buy the stock if it goes public in 2012? In order for the company to go public it will need to pass the “500” rule. In layman’s terms, there must be 500 investors in the privately held company before it can go public.
And Facebook, without a doubt will probably pass this threshold and more-so, to become a stock in your portfolio.
But will it be a stock option worth investing in? Facebook’s user base is already starting to see the beginning of a decline…a very slow one, and the fact that people are leaving, can’t be a good thing. In May, 6 million users decided they didn’t ‘like’ Facebook anymore and bailed. Why did these people leave? It could be a multitude of reasons… perhaps they never collected a significant amount of friends…, or maybe they were sick of Facebook sharing their personal information to marketeers or anyone that who would buy it. It could also be the fact that people are ready to try something new. It happened to Myspace, so it could definitely happen to Facebook. Overall, this is not a good investment indicator, since you need a strong army of supporters to make sure your stock is successful.
The most recent ‘professional’ social network that went public is LinkedIn. That technology oriented stock anticipated being the darling of Wall Street for a few months, at least. It blasted onto the stock market in May and created a frenzy that shot the value of the shares upwards to $122.70, (which is now currently the 52 week high) in its first few days trading. The stock has since took a nose-dive and is currently coasting around the $70 to $75 dollar mark.
Will LinkedIn’s stock price turn around and beat its 52 week high? Probably, but it will take some weeks or probably months as the velocity of the shares being purchased starts to simmer and as we head into summer. Even Apple was expected to do better this year than they are now, and so far, they are only teetering around the $330’s per share mark. Is this lower than expected price caused by a long overdue correction? Or are folks still antsy about Jobs’ health… who knows.
Facebook may seem like a win-win stock to purchase. It still has many members and growing, especially as younger generations get more involved online. This is a captive audience that is willing to click on ads or purchase Facebook apps to make Facebook an even more engaging experience. It’s certainly an advertisers dream! But indicators like people leaving the social network for other social media sites, consistent issues with security and your personal information, make it a stock you’ll have to think twice about before purchasing.
The days of of the pre-tech bubble back in the 90’s, where people got rich from tech stocks and drove around with license plates with the word ‘Yahoo’ on it, are over. These days, just a blip will send any stock soaring or sliding in no-time, even a mega-stock that Facebook could potentially become. In the end, Facebook would have to become as ambitious and forward-thinking as Google to create a share value that will grow year after year and become the next Wall Street nectar, and not just a short sale pawn. Because you just never know when the next Facebook will be lurking around the corner…
So, would you invest in Facebook if it went public?