Should Facebook Users Put Money Into Facebook’S Stock_ by Martha446Martinez

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									Should Facebook Users Put Money Into Facebook’S Stock?


So the investment world continues to be abuzz over the last several weeks, because of the recent
revelation that the much anticipated Facebook IPO would certainly soon be announced. NAturally
Facebook has proven to be the social networking phenomenon like no other. The site reportedly has
more than 800 million users and can likely grow to over a single Billion in membership within the next
several years. Indeed what apparently started as a small venture in Mark Zuckerberg’s Harvard dorm
room has now morphed into one of the most popular and also widely used (some sources show FB is
the most visited internet site in the world, even beyond google ) websites in the world. The growth
achieved by Facebook has been amazing. The following graphics pretty much declare it all.



As we can see the site has grown it’s active users by simply 100s of millions in the last 5 years
(Adding Around 300 zillion just since the beginning associated with 2011). Perhaps even more
impressive though is that fb has consistently managed to monopolize more of their users moment.
Time is valuable, obviously , and the more of it that will users are spending on fb the more valuable
the users grow to be to Facebook!
Growing Facebook And Growing Riches


With the growth in popularity of their particular social networking site, Facebook has also managed to
grow the amount of money moving through their operation. There are a number of high profile
investments released at different points inside company’s trajectory. These included deals with
computer giant Microsoft and also PayPal co-founder Peter Thiel, among others. Facebook’s actual
enterprise activities have also started to produce more cash. Facebook’s revenue has grown from
$777 million last year to $3.7 billion dollars this year. According to the IPO declaring , they have also
achieved productivity , with their bottom line now from $1 billion, up coming from $229 million in 2009!
With the growing revenues, income , and popularity, Facebook has already made numerous people
very rich. Considering that reports are indicating that the their IPO will be appreciated at around $5
billion dollars , their will now be a direct path for company partners and investors to money in their
Facebook shares with regard to millions and even billions! Mark Zuckerberg himself has a 28% stake
that is likely to be appreciated in the $20-$30 billion array. So yes Facebook has become a
tremendous success story. The actual company’s short but volatile history has exemplified the actual
entrepreneurial dream and some key players have gotten wealthy because of this fact. Now there is
pleasure building among those in the fiscal media who are talking allot about the prospect of personal
investors being able to take part in Facebook’s wonderful success story mainly because it enters the
public markets. NEvertheless this begs the question can Facebook continue to live approximately the
hype and anticipations ? Or can Facebook’s many users find a way to profit from the business
success they have aided to build?
Can Facebook consumers Become Successful Facebook Investors?


This question makes me suppose the old investment quote that says “people should invest in what
you know”. Following this logic would certainly indicate that Facebook’s open public shares present
their many users with a wildly worthwhile investment opportunity. Of course, much like many things in
life, it’s most likely not that simple. As I have discussed above, Facebook has surely emerged as an
influential force in the world of technology. It’s also true that they have allot of potential to grow and
also expand their business later on. The IPO itself brings allot of benefits to Facebook’s position. The
company will be injected with around $5 billion dollars of capital, giving them the time to pursue
numerous strategic initiatives in order to further their particular future growth and development.
Expansion within foreign markets, and making the sites capabilities to generate brand new sources of
revenue from places like online payments, cell advertising, and social games are all possible areas to
the social networking powerhouse to invest in. Strategic acquisitions of other technological startups
that would give fb access to new niche market segments or valuable pieces of intellectual property,
could also be on the table. Thus making money on investing in fb will a sure point right? Well not so
quickly.


Opportunity Comes With Risk!


Certainly Facebook may hold allot of investment potential for those willing to take a leap. With that
said investors should consider that there are in addition numerous risks that will be attached to the
company’s newly public explains to you. Before putting any wages in Facebook it will benefit traders
and investors to take some things into consideration. One of the first warning flag that should be
jumping out from anyone considering the shares here is the high price tag that the company will begin
trading from. Facebook will have a Market cover of around $100 billion before their IPO. To put this
kind of in perspective they are appreciated as high as McDonald’s and more than Boeing. This is in
spite of the fact that McDonald’s and Boeing generate far more revenues and profits. McDonald’s had
around $24 billion dollars in revenues and Boeing had over $64 billion dollars last year. In other
words there is allot of very high expectations costed into Facebook’s market appraisal right now.
Investors are certainly not gonna be getting bargain prices when they put money in at this point. If
your company fails to meet these types of expectations by showing strong growth in future profits and
also revenues the share price are certain to get hammered. There are also other considerable risks
that investors should think about. Many analysts question Facebook’s staying power. Their social
media has attracted and continued to engage many users for some time now, but asking when
Facebook could become the next MySpace is a legitimate question. After all there are many savvy
competitors looking to steal market share inside social networking space. Google, twitter , or maybe
even some college student in their dorm room could potentially build the next hot social network that
will knocks Facebook out of the control role and into becoming one of tech history’s many fads.
Another risk and perchance one of the bigger ones is the fact that Facebook will be unable effectively
build a business model that monetizes their large user base. Even though Facebook continues to
rapidly develop their users, they still need to figure out how to turn those consumers into revenue and
income. Especially profits! The markets are not valuing Facebook from $100 billion because they are
planning on them to lose money. This could end up being challenging, due to the fact that maybe the
most valuable thing about Facebook’s many users is their details. The issue for Facebook will likely
be in finding a way to monetize their particular users information without disturbing the company’s
relationship with users. Part of Facebook’s appeal at this point is that users appear to trust the site
enough to express all kinds of information with it. When Facebook ever breaches this kind of trust, in
any way, there would probably be adverse consequences for the company’s reputation and of course
the shareholder’s investment dollars. So what call up should those looking to invest help make on
Facebook.


My view On The Opportunity In Facebook’s Stock


The first point i am going to hit on, is don’t invest money that you can’t afford to lose. In fact if its
money you can’t pay for to lose you shouldn’t own it in the stock market at all, a lesser amount of
Facebook. My second point , would be that anyone investing dollars should be taking the time to
understand how much of an investment in Facebook will likely be like. As I have already mentioned
above, Facebook does have possible , but there are also many extremely real risks. The stock price
will likely resemble a roller coaster with regard to investors, due to the many uncertainties. Think
about whether this movements is something you are ready to possess your money exposed too.
Keep in mind , scared money never generally seems to win! Most important, in my opinion, is perfect
for potential investors to realize that the odds are not in their favour when it comes to investing in or
trading Facebook’s stock. One of these articles detailed a number of hard truths concerning personal
finances. As there are currently many media pundits and also market analysts out hyping Facebook’s
public offering (as a great new opportunity), it is important to look past all of the opinions and
nonsense to search for the truth. The hard fact about Facebook’s offering is the fact that its not about
providing a new opportunity for the average joe full price investor. It is all about facilitating a way for
company partners and hedge fund traders to cash in their great gains (that are only in writing right
now). This graphic demonstrates just what I mean.


It can also be an avenue for walls Street bankers to make yet another killing in 2012 as well as being
an opportunity for the giddy financial media to profit coming from having an event to nonsense up and
promote. If your average guy makes an further buck as well, then thus be it, but just remember, i'm
talking about not the main reason Facebook is going public.


To Buy or not To Buy?
Facebook has evident potential and the shares might vary well start off hot when they begin trading,
but I would still caution customer warning. They are expensive from my personal view and come with
lots of threat attached.


My Overall approach to How To Approach Facebook’s Stock


The above points don’t mean that fb has no chance of ever earning money for investors now that
they're going public, but they are simple details that individual investors should be investigating before
committing their own hard earned capital. Me personally, I plan to stay away from Facebook at this
point. We don’t think the potential benefits justify the heavy hazards. That’s my opinion though. For
many who want to take the risk appropriate when Facebook goes open public , I would recommend
having a plan to manage the negative effects risk. Pick a point (preferably 10% or less) were you will
cut your losses. The principle goal should be not to generate losses. Remember too, you can always
return in at what would be described as a better and more attractive price if it tanks. Also still learn
everything you can concerning Facebook’s still developing enterprize model. If you are interested in
investing, you ought to stay interested in learning about precisely what your committing money for
you to. Don’t just passively purchase and hope for returns, but buy and continue checking how
Facebook will achieve those returns on your behalf. To conclude do allot of homework before making
any decision and become careful to separate the hard details from the hype.




Disclaimer: i am not a financial advisor and this is not the solicitation to buy or make money. I
do not plan on investing in fb or any other companies mentioned inside article, but may
change my mind. This article is just a judgment piece and I am not registered as an advisor
while using SEC. You should always do your individual research before making any
investments.

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