Should mainstream, everyday investors buy Facebook in the aftermarket? The answer, of course, is it depends (isn’t that always the answer?). In this case, what truly matters are your expectations and risk tolerance. But if you think small investors can “get in early” and make a quick mint, you’ll want to think twice.
That’s bound to happen for a select few, including Facebook employees and those with Morgan Stanley and Goldman Sachs connections. After all, this is on track to be the biggest tech IPO ever. In the end only an estimated 20 percent of the shares will be left for the general public, and traders will scramble for much of that. So where does that leave the small investors?
Many experts — and I am not one of them — think this means if we want a piece of Facebook we’ll probably pay a higher price for it and expect to buy and hold before turning a profit.
Some chief concerns I’ve read from analysts: Can Facebook create an extremely profitable advertising niche? What about competition from Google? Will Facebook lose fans because of privacy issues? How will it expand and engage users even more deeply? Only you know how comfortable you are with the possible answers.
Keep in mind this is all a few months off since the company just filed IPO paperwork within the last week. So what does the buildup mean for the public? Forbes expects demand for Facebook stock to be 400 times the supply.
We did a great interview with our partners at CBS Moneywatch about reasons why they say “Facebook IPO shouldn’t excite you.”
And here’s one good article from Forbes: forbes.com in which the writer talks about “backing the truck up” and buying as much Facebook stock as possible,
And another that may help from Fortune/CNN: finance.fortune.cnn.com
Right now, the general advice seems to be, wait a few days after the stock opens, until the feeding frenzy calms. Also, that mutual fund in your retirement portfolio might soon include Facebook, as well. Many fund managers will jump on this stock.
As with all investing, we each have to make a judgment call that could pay off — or have us paying. Investing is always a risk. Expect much more info on Facebook this Spring, as company executives make the rounds to rally investors. Will you be one of them?
About The Blogger
– In her Brooke’s Bargains blog Brooke Wagner writes about finding bargains and saving money for her family. She calls it one of her favorite hobbies. Blog entries cover everything from the latest steals, deals, and freebies to cheap family activities, saving for college, and what to buy right now.