24 hours to the largest IPO ever .
A buzz has disturbed my Twitter and email accounts with talk of the imminent Facebook IPO. Everyone is trying to determine whether this is a good investment. In previous posts, I’ve spoken about how Facebook users will soon be buying shares in the company for as low as $10 and the sudden appearance of Facebook advertisements across the web right before their IPO (tentatively scheduled for this Friday, May 18th.)
I’d like to sort through some of the opinions floating around out there on this IPO, so let’s review those who recommend buying and those who caution against it.
PROs say: Buy Facebook
- Steve Wozniak, Apple Co-founder, told Bloomberg that he would buy Facebook stock regardless of price, saying this is good for investors who want to make money.
- CNBC Mad Money’s Jim Cramer said that “if you can get in on the Facebook IPO, do it. This could be among the greatest growth stories of the era.”
- “If this stock opens near the projected price of the IPO, I’ll be pressing the ‘Like’ button,” wrote Joel Elconin, an independent day trader for Seeking Alpha.
- According to Martin Sorrell, CEO of WPP advertising, “I don’t think 900 million people can be a passing fad.” He mentioned that he would buy shares and plan to check on them again in “15 or 20 years’ time.”
- “I think the Facebook IPO will be successful…it could be wise to enter and get out quickly,” recommends Dr. Louis Rhéaume, an analyst at Seeking Alpha.
CONs say: Sit Back
- “By the time retail buyers have a chance to sell their stock, the wind will probably be out of Facebook’s IPO sails, sadly,” IPOdesktop.com President Francis Gaskins told the Wall Street Journal.
- Ordinary investors are better off waiting awhile until the Facebook buzz cools down, the Wall Street Journal concludes that experts are saying.
- Control Your Cashco-founder Greg McFarlane says, “As a general rule, the more heralded the IPO, the worse it bodes for the company in question.”
- Yahoo Finance brings attention to the major risks of the Facebook IPO, including that this IPO has been overhyped, Facebook growth is decelerating, the shift to mobile usage threatens revenues, and CEO Mark Zuckerberg said that the social side of Facebook is more important than the business side (while he owns 57% of the company.)
- Morningstar analyst Rick Summer says, “The focus on short run challenges may lead to stock price declines and ultimately create a very interesting buying opportunity for the shares at a later date.”
What If You Had Bought Apple Stock In 1980? might give you an answer whether to buy or not.