Posted by: coastcontact | May 15, 2012

Should You Invest in Facebook on Day 1?

General Motors has announced that it will stop advertising on Facebook after determining that the ads on the social-media site are ineffective.

The hype over Facebook’s IPO really is extraordinary. While many younger people are fans of the social media giant, there really is no indication of the actual earning power of the company. I saw Your Money on CNN this past weekend and two of the three guests were totally positive that making an investment in this company would be a wise move. The third, Ned Riley (Riley Asset Management) said the shares will likely start at about $60 a share and go lower by this time next year.

Apple struggled for years before finding its strength. Google just kept building its strength from the start. Other social media web sites have struggled. Which retail web site comes in third place behind Amazon and E-Bay? I don’t know the answer.

For those people who are willing to gamble the investment is a wonderful opportunity. For those of us who want some real performance numbers this investment seems very suspect.

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Responses

  1. I just read where they are trying to charge for facebook in new zealand, and people will get tired of all the ads and i know that i wouldnt pay to use facebook and don’t know many others that would how about you?

    • Pay to use Facebook? Not on your life. Of course my children might pay. I think they are wise enough to know not to ask me for money for this foolishness. As Betty White said on SNL “It’s waste of time.”


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