I bought shares of Facebook yesterday on its opening day on the market after its initial public offering (IPO).
Well…it was actually more like one single share of Facebook. I bought it from OneShare.com where I got one single share framed for my wife. Should you buy shares Facebook IPO?
It all started on Thursday when my wife asked me if I was going to purchase any shares of Facebook on Friday when shares began trading on the public market.
My wife and I do not really see eye to eye in most cases about finances and investing. She loves the idea of Facebook as a company but does not really care to look at the fundamentals of the company as an investment.
Why Facebook Makes A Poor Investment
While Facebook may be a great company and website that over 900 million users enjoy using, it also may be a poor investment at these price levels.
Here are a couple of things to consider when looking at the company’s fundamentals.
- Facebook share price sells for 20 times its projected 2012 revenue. Google trades at about six times its projected revenue for this year.
- Facebook’s $100 billion value is lofty. Apple debuted with a market value of less than $2 billion in 1980.
Microsoft had a market value of less than $1 billion after its 1986 IPO, and Google had a market value of nearly $25 billion in 2004 after its IPO.
- Facebook has generated less than $1 billion in net income over the past year. It has a massive user base that still needs to be tapped. They haven’t figured out how to capitalize on so many eyeballs and translate that into profits yet.
- Facebook is struggling to earn advertising revenue from mobile users which have rapidly been increasing over the past couple years.
- Facebook is still locked out of China thanks to the Chinese government’s ban on the website.
Facebook’s IPO almost certainly represents a poor long-term investment at or above the IPO price of $38 per share.
Facebook's Initial Public Offering - An IPO Case Study
That is why I am not buying a large amount of shares for my investment portfolio. But, that has not stopped me from buying a single share for my wife as a gift.
How To Buy One Share Of Facebook As A Gift
OneShare.com provides customized gift stock ownership by making it easy and affordable to buy a framed single share of real stock.
The real stock certificate represents true ownership in publicly traded companies. OneShare.com offers single framed shares of stock in America’s favorite companies like Facebook, Disney, Harley Davidson, World Poker Tour, Starbucks, Dreamworks, and tons of other public companies.
The owner is entitled to annual reports, declared dividends and any other shareholder perks just as you would if you had bought the shares through a discount broker making this an everlasting gift that is interesting and educational.
GiveAshare.com has companies that fit all gift-giving occasions.
Should you buy Facebook IPO shares?
Should you buy Facebook IPO? Did you buy shares of Facebook on Friday? Are you going to buy shares next week?