Facebook IPO

[Me2SouthBend]

Is there anyone here that is considering buying in to the Facebook IPO when it hits the market? If there is anyone here w stock experience and wants to provide some opinions as to how this may go, I'd love to hear. My wife and I are considering investing a solid piece in this but don't want to be foolish with our money. My market experience is limited to my 401k and moving money between the various available funds, this far it's worked pretty well, but I am by no means an expert. Appreciate some convo.

 

[WaveDomer]

Here's a good article on it, linked here.

What would scare me would be the possibility that it's way overpriced to begin with.

Also, don't skip the comment section on that article. You'll read a lot of viewpoints there.

 

[loomis41973]

IMO would be a very bad investment. FB is already losing popularity in the US and Europe.
No way they can generate the revenue needed.

Also very unlikely you would be able to get in at the IPO price.

 

[IrishLax]

Is there anyone here that is considering buying in to the Facebook IPO when it hits the market? If there is anyone here w stock experience and wants to provide some opinions as to how this may go, I'd love to hear. My wife and I are considering investing a solid piece in this but don't want to be foolish with our money. My market experience is limited to my 401k and moving money between the various available funds, this far it's worked pretty well, but I am by no means an expert. Appreciate some convo.

I wouldn't do it. I certainly don't have much "stock experience" but I have two friends actually working on this IPO (one on the accounting side, one on the i-banking side) and, frankly, the "bubble" potential scares me as a long-term investment. I think you could make a lot of money in the short-term because mass psychology likely drives the price higher on day 1. This IPO has drawn on and on and on and on... so the hype/build-up could easily, in my uninformed opinion, lead to a big stock price jump on the first day from wherever it opens at.

 

[woolybug25]

If you are trying to maintain a sound value investment strategy, then IPO's shouldn't be your game. In my opinion, leave IPO's to the day traders.

Buying a stock on your personal impression of the company instead of sound financial analysis is a bad investment strategy. You can use solid ratio analysis to develop a value investment plan of purchasing stocks of companies you would actually want to own vs taking a gamble on hoping that Facebook can outperform Google by 3 multiples in order to gain similar results. That is speculating, and if you are investing for retirement, then avoid speculating.

This might sound harsh too, but it's the truth. If you don't want to learn how to analyze financials (it's really not difficult) then you shouldn't be investing in stocks period. It sounds like you are willing to make some significant moves that can impact your retirement portfolio, so investing in a hot IPO is probably not a good idea unless you know what you are doing. Most IPO speculators are generally looking gain off the IPO's initial bump, then they dump it. IPO's more times than not are not done to create operating capital, it is to pad the pockets of the owners. The investment bank, the owners and insiders are the people that make money on IPO's, and the general public are the people the gladly open up their wallet to pay for it. This is speculation and people make millions doing it, but those people aren't gambling their retirement fund to do so.

I see investing in Facebook's IPO more like investing in the internet IPO's of the 90's vs being in on the ground floor of Apple. Just my two cents.

If you are interesting in learning more about investing, start with these two books.

- The Intelligent Investor by Benjamin Graham (the Value Investing Bible)
- The Way of The Turtle by Curtis Faith

 

[Grahambo]

I'd like to invest but outside of my retirement, really don't know what I'd do. I started reading Graham's book a few years ago but nothing I can say would get her to go along with investing so I stopped learning about it.

 

[QuarrelsomeIrishAmerican]

My philosophy on stocks is when everyone and their mother is talking about how great a stock will be, chances are its massively overpriced. I feel that way on FB, however, I like their obsessive CEO and their future earnings potential. Although, it will be overpriced now, I tend to think they are just scratching the surface and you want to have a 5-10 year investment window with a tech company like this. I don't buy they are losing popularity. FB is fully entrenched in our lives, especially women's lives from what I can gather observing my wife, family and friends. They just need to figure out how to get more money from this popularity.

You will not be able to buy at the IPO price. My guess is that doubles, if not quadruples, before you will be able to buy. FB will be volatile stock and you will be best served to wait and buy on the first big pullback (price drop). If I was pretty intent on buying, what I would do is take a reasonable amount of money that my wife and I can look at and say "we don't mind losing all this money if it came down to it," then put 50% of that money in whenever I had the chance. Then after the first big pullback, do the next 25%, then after the 2nd big drop, drop your last 25%.

Tread very carefully and make sure you have an appetite for volatility and understand you may lose money.

 

[IrishLax]

The one thing I will say, in defense of investing by "gut instincts," is that if you truly believe in a company or product I see nothing wrong with taking a small gamble on them. For instance, my father moved a bunch of money at the beginning of the recession to Chipotle because he thought their burritos were the greatest thing ever. Chipotle's share value today is 800% of what it was when he moved money to it in 2008.

Professional investors take gambles like this all the time. While out in San Francisco last week, I heard a number of stories from friends in i-banking about guys who bet against Greece long before they imploded and made 100x+ on their investment. So there is nothing wrong with taking a gamble if you have personal conviction/gut instincts/a hunch.... you just have to realize that it is a gamble and not a sound long-term investment approach.

 

[QuarrelsomeIrishAmerican]

Some of Peter Lynch's best buys were made buying companies that made the products that his daughter was obsessed about. Very similar to IrishLax's dad buying Chipotle. I try to follow the same mantra when buying stocks and look for things that I or the people around me obsess about. Most times, this went against sound financial advice. It all comes down to your stomach for volatility and the ability to stick to your guns and not sell when the stock is taking a beating. Much tougher than it sounds. Even tougher is buying more of that stock after your initially investment has lost money. If the obsession is there among the customers and if there is good leadership and vision among management, you can make out like IrishLax's dad with a 800% gain.

There is no lack of obsession with FB thats for sure. Once again, don't mortgage your future on it, but its ok to invest a sum that you are comfortable losing.

 

[Irish Houstonian]

If you can get in at the offering price then that'd be great, because it's almost certain to pop 10%+ at some point in the day, at which point you can take your profits. Problem is normal retail investors don't really have access to these trades, so if you're just considering buying it during the first day I'd definitely weigh the risks vs. rewards.

 

[gkIrish]

Obviously everyone is simply giving opinions, so I'm not criticizing anyone's advice, but you should speak to a professional face-to-face before you make any decisions.

 

[woolybug25]

The one thing I will say, in defense of investing by "gut instincts," is that if you truly believe in a company or product I see nothing wrong with taking a small gamble on them. For instance, my father moved a bunch of money at the beginning of the recession to Chipotle because he thought their burritos were the greatest thing ever. Chipotle's share value today is 800% of what it was when he moved money to it in 2008.

Professional investors take gambles like this all the time. While out in San Francisco last week, I heard a number of stories from friends in i-banking about guys who bet against Greece long before they imploded and made 100x+ on their investment. So there is nothing wrong with taking a gamble if you have personal conviction/gut instincts/a hunch.... you just have to realize that it is a gamble and not a sound long-term investment approach.

You're dad took a bet on an investment grade business. It wasn't that much of a risk.

Investing long term in companies simply because you like them is a losing bet. Shorting Greece for instance, wasn't a gamble. You could look at the numbers and see what was going to happen. If the I-Bank guys in my firm bet our shareholders dollars on "gut feelings" I would fire them.

You can win and lose betting on fads, gut feelings and personal impressions of companies. But you win more times than not if you base your investment philosophies on sound value investment principles, otherwise like you stated, it's just a gamble. This is what Benjamin Graham's principles are based off of and how the worlds best investors (Warren Buffett, for instance) utilize. Invest in companies that have cash flows, have improving earnings, and low debt. Compare that to their stock price/Market Cap and viola'... you have your answer.

@Me2 - As GKIrish stated; it's good to get some feedback, but if you have real questions regarding the direction of your portfolio, speak to a professional.

 

[woolybug25]

Some of Peter Lynch's best buys were made buying companies that made the products that his daughter was obsessed about. Very similar to IrishLax's dad buying Chipotle. I try to follow the same mantra when buying stocks and look for things that I or the people around me obsess about. Most times, this went against sound financial advice. It all comes down to your stomach for volatility and the ability to stick to your guns and not sell when the stock is taking a beating. Much tougher than it sounds. Even tougher is buying more of that stock after your initially investment has lost money. If the obsession is there among the customers and if there is good leadership and vision among management, you can make out like IrishLax's dad with a 800% gain.

There is no lack of obsession with FB thats for sure. Once again, don't mortgage your future on it, but its ok to invest a sum that you are comfortable losing.

Lynch is a value investor and does not buy stocks based on "gut feelings". His principles are actually quite simple:

1. Only Buy What You Understand
2. Always Do Your Homework (ratio analysis)
3. Invest for the Long Run

Gauging market appeal is certainly important to deciding if a company has long term viability, but you would never see a guy like Lynch bet on a company with poor financials. Regardless or whether or not it looks like it could be the next big fad.

 

[Me2SouthBend]

Good stuff guys. Imagine this conversation on the meat chicken board, except instead of discussing FB stock, they're tied up in knots trying to decide whether or not to take advantage of the buy 1 get 1 sale on sweatpants at WalMart.

 

[TerryTate]

Never go IPO chasing.

If you're not in at the IPO price, don't bother.

 

[BGIF]

Good stuff guys. Imagine this conversation on the meat chicken board, except instead of discussing FB stock, they're tied up in knots trying to decide whether or not to take advantage of the buy 1 get 1 sale on sweatpants at WalMart.

Meanwhile in Columbus, they're talking about the football pants special, Sell 1 Get 1 Free at The Tat Shop

 

[enrico514]

Is there anyone here that is considering buying in to the Facebook IPO when it hits the market? If there is anyone here w stock experience and wants to provide some opinions as to how this may go, I'd love to hear. My wife and I are considering investing a solid piece in this but don't want to be foolish with our money. My market experience is limited to my 401k and moving money between the various available funds, this far it's worked pretty well, but I am by no means an expert. Appreciate some convo.

I doubt you could get an allocation but even if you could... I definitely would not "invest a solid piece" in Facebook out of the gate. I agree in investing in companies you know, use and appreciate but you must also consider valuation. Great companies are not necessarily great investments.

 

[WaveDomer]

It'll be interesting to see if this IPO is affected at all by the revelations, now coming to light, that FB is a meeting place for pedophiles, who are basically operating in the open on the network. Link here.

 

[nlroma1o]

Like some have stated already, by the time it hits the open market, the price per share is probably going to be pretty unattractive. And unless you work for FB, a venture capitalist firm, the bank thats underwritting the deal, or you are Oprah. It's more or less, impossible to get it at the IPO...

Would I buy it?

No

I throw my money into nano and bio tech companies.

 

[Irish Fam]

buy apple

 

[Grahambo]

I would like to buy a time machine, turn the clock back, and invest in some Google, Apple, and Netflix at the time.

 

[beryirish]

Just keep it simple...you can still make a lot of money doing the boring stuff just not as fast I guess.

Mutual Funds - UITs - ETFs - Annuities - Managed Money - CDs - Bonds if you don't follow the market or trends or company financials.

Base it all on your risk tolerance and your financial goals/objectives

 

[ND NYC]

i fear this thing is gonna burn a lot of investors

100B valuation?

really?

ill be watching the carnage from the sidelines...

 

[RDU Irish]

Facebook looks to be priced at $75 to $100 billion versus I think $3 billion of revenue. That is about half the value of Google ($200B)who had almost $38 billion of revenue last year. I fail to see Facebook having anywhere close to the same commercial application (read: ability to generate revenue). I wouldn't touch this stock with a ten foot pole. But I would touch it with a seven foot Lithuanian if it dropped to about $5/share (still a $10-$15 billion company).

Besides, Facebook kind of creeps me out.

 

[Me2SouthBend]

Article discussing Facebook IPO. It will be very interesting to see where this goes. I will watch from the sideline.

What to know about Facebook's IPO - - MSN Money

 

[Veer option]

Unless you have plenty of zeroes in your bank account, you probably can't get in on the IPO. There are a bunch of cooks in this kitchen already, and they're going to grab as much of the meal as they can for themselves and their friends.

Very important point.

 

[phork]

I would like to buy a time machine, turn the clock back, and invest in some Google, Apple, and Netflix at the time.

How about Berkshire. In 1966 you could buy an oz of gold or a share in Berkshire for $20.

 

[Veer option]

How about Berkshire. In 1966 you could buy an oz of gold or a share in Berkshire for $20.

Also groovy hippie sex.

 

[dshans]

Also groovy hippie sex.

You overvalue the groovy hippie sex. "Free Love" was the rate of exchange.

 

[nlroma1o]

"Free Love" was the rate of exchange.

Giggity*