Facebook shares are going on sale at some point in the not-too-distant future and many people are considering buying them when they do. But what is the point, what will a share offer you, and is it worth it?
Facebook was born in the 2000s as a localised and then national university networking website, but it now has around 800 million users worldwide. It has changed the advertising world and reshaped social media marketing.
In addition to this, it has had a film, The Social Network, made about its development and it is valued at around $100 billion. This is an impressive history for any company and the chance to own a slice of it is very tempting indeed. Buying Facebook shares when they come into the public offering could be a great way to develop a small nest egg. After all, the company is growing and looks set to continue to do so. Employees who owned shares were sceptical when Zuckerburg refused to sell the company for $1 million, but understandably they are more than pleased now that they are facing profits of around $10 billion when shares are offered to the public. But is it a smart investment?
Google and Apple
Google and Apple are two companies that are comparable to the IPO offering which is to be made by Facebook. There were sceptics who questioned how sensible buying an $85 share in Google was and they have been shown to be wrong in hindsight. Google has continued to grow and investment in such shares has proven wise indeed. Similarly, Apple looks set to continue its growth and investments in its shares could potentially yield large profits.
Facebook looks set to follow suit with regards to growth and it is remarkably unlikely that the value of Facebook shares will drop sharply when the shares are offered to the public. If you look at the top of this article then it is clear how heavily integrated Facebook is in our online lives. The ability to share articles, share images and share stories is offered by Facebook in a way which seems unlikely to fall out of interest.
For many of us Facebook provides a photo collection which rivals, and usually beats, that on our own computers. The height to which Facebook has been integrated into online marketing has even made it beneficial for companies to advertise their Facebook page as a place to visit before their own landing page!
So is it a Good Investment?
Buying shares in Facebook is likely to offer you a good return on your investment in dividends. There is little doubt that Facebook shares will continue to grow over the next few years. Buying a small number of shares in Facebook is therefore probably a good move if you have spare cash to invest. But it is almost certainly unwise, however, to invest a large amount in Facebook. The simple reason for this is that investing in Facebook is not really an investment. Investing is about examining the values and potential of a company in detail and weighing up the risks versus the potential for profit that is offered by the investment.
Remember that private investors have already had the best pickings of the company before this public offering and consider if there is a less flashy but more profitable option available to you before investing in Facebook.
Read more: He Who Shares, Wins