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Would You Buy Into Facebook’s IPO?

by Flexo on October 10, 2007

in Investing

Yesterday, I wrote how I was a bad judge of Google’s initial stock valuation. Here’s a similar, but purely hypothetical situation.

Facebook logoSuppose Facebook were to become a public company. As much as I hate to admit it, the social application and framework seems to be what all the kids are talking about these days, where “kids” are everyone under the age of 35. (Personally, I like Facebook because it lets me play Scrabble with my friends who live far from me.) MySpace seems to be history.

Would you purchase Facebook shares if and when the company goes public? If so, do you think you’ll turn a profit right away or do you think it’s more of a buy-and-hold type of investment? Social apps tend to become yesterday’s news fairly quickly, but with Facebook’s framework for building applications on top of the software, maybe that’s not the case here.

By the way, I have a Facebook profile. If you’re a member, connect with me there.

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About the Author

Flexo, the owner and creator of Consumerism Commentary, has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow him on Twitter.

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  • Tyler
    Personally, I'd buy into Facebook. I love their interface TENFOLD over Myspace. Not to mention, the advertisement potential is amazing. Not too many sites out there that give advertisers the prime target audience of teen-35 year olds! Not to mention, most are in college (more money usually).
  • I was so upset i didn't have any money (being in my 2nd year of college) to purchase any google stock during the ipo. I could not convince my father to do so either. I really think Facebook has got it right. I would not hesitate now to put a few $$ into facebook.
  • While no investment, especially in "tech" or "dot-coms" is safe, Facebook seems to have what Warren Buffet calls "a moat." They have seemingly buried MySpace; a feat that many thought was impossible.

    It also seems to be starting to grow a bit with the over-35 market.

    I'd definately buy a small number of shares as an aggressive part of my portfolio.
  • James
    Uggh, that would depend on their cash flow and revenue. Amazon.com's value had risen quickly due to hype, peaking at 109 in Mid-1999, crashed with the rest of the market, and still hasn't reached that high (though, in recent months, it's been close).

    So, I'd say you'd want to day-trade this one, should it go public. Re-invest the on the gains.
  • I'd have to read the documents of the filing. Valuation is everything. It's like asking if someone would buy an apartment in the Trump Towers. I would, if the price was right.
  • aaa
    it should be a buy at the beginning because every1 will bump it up. but it's not likely a buy-and-hold stock because its P/E is likely to be crazy, like 100+, and this company doesn't yet have a business model that supports that number over the long run.

    Remember Facebook is only making money on the ads... when was the last time we clicked on one? maybe the applications ppl build have a higher potential.
  • Facebook stock would be what I call a glamour stock. It will likely be way overvalued and insiders will sell their shares as soon as the lockup period ends. In addition, I really do not think Facebook has a sustainable competitive advantage. There will likely be a newer and cooler social networking site within a short period of time. Does anyone rememeber MySpace?
  • Lizz
    Well I will probably purchase under 10k shares with them if they go public.
    Yes i will buy but will sell at short period as well . If anybody is so kinda and keep me updated if they ever go up for IPO and email me plaingurl@yahoo.ca
    Thanks !!
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