Facebook is the new “big thing” on the IPO block. Should you invest in it? Is it like Apple and Google?
Well, let’s rule out the Apple and Google comparisons right away. First of all, nobody can touch those companies. That makes sense. Apple support has taken over the computer service world and Google has done the same with Internet support browsing and cloud services.
Let’s look at some past big hyped up IPO’s. Groupon opened up at $20, went up to $28, then fell to $13. A more extreme example is Pets.com that opened up at $84 in 1999 and plummeted to 9 cents per share in 2001. Yes, that’s when the bubble burst, but a bubble may burst at anytime on an IPO.
The concern is whether the stock may recover from its first day’s decline. You have to keep in mind that the yes, Facebook is Apple-like in that Mark Zuckerberg is a genius as was Steve Jobs. But, you have to ask yourself if Facebook can develop new trends or will it just be another MySpace.
Then, you may be lucky enough to ride the coattails of an Amazon or eBay IPO that skyrocketed and has since prospered. My question is how else Zuckerberg can keep people wanting more on Facebook. Everyone and his mother and grandmother is on it which lacks cool factor points. Sure, the younger generation toys around with those animal games and other stuff to line Facebook’s pockets.
But, what’s being liking friends, posting, and sharing online. Have they hit their creative ceiling? Unless they partner with other companies to enhance their service offerings, I’m not sure they can keep up such exponential growth to justify holding onto Facebook for a while. In the words of the indomitable M.C. Hammer, I think you should just “Hit it and quit!” In other words, buy it and sell it right away during the IPO wave.