Facebook stock - Should you buy?

3:49 PM, May 16, 2012   |    comments
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St. Louis, MO (KSDK) - Bits of the social networking giant Facebook go up for sale in just a couple of days.

But before you break out your pocketbook, you need to know what it will take to buy. The Facebook IPO could raise as much as $18 billion, expected to be the largest IPO in history for an internet company.

Unless you know the right people at Facebook or you have a six figure account with the right bank or brokerage firm, you're going to have a tough time getting Facebook at the IPO offering price: between $34 and $39 a share.

The big winners will be Facebook employees and early investors. Those are the people we should all be jealous of. Most small investors will have to wait to purchase Facebook stock on the open market, but that will be more expensive.

"They'll be able to purchase it on the open market because it will be a listed stock, over the counter, available for trading, you can certainly step in and buy some," said Juli Niemann, financial analyst with Smith Moore and Company. "But you don't know what price it's going to be so whatever you do, don't put up a market order to buy at whatever it happens to open. That's almost a recipe for disaster. The safer way to buy it, there are a number of technology funds and entertainment funds that will have Facebook in their mutual fund."

Niemann points out that General Motors plans to stop advertising on Facebook after spending $10 million last year on online ads, claiming that those advertisements did not help the company sell cars. Niemann said that raises questions about Facebook's ability to sustain revenue growth.

After Friday when Facebook starts trading on NASDAQ, the company could be valued at over $100 billion. With 900 million users, Facebook remains too big to ignore.


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