Ask HN : Should I buy Facebook stock? | Hacker News Reader

Ask HN : Should I buy Facebook stock?

6 pointsfuncktional6 comments

Stock market newb here. I've mostly only owned my employer's stock. Would it be a wise decision to buy facebook stock as soon as they IPO? My brief research says otherwise; after a 6 month'plateau' period, employees will be able to sell their stock and early investors will cash in bringing the price down.

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I dabble in the UK markets (ftse 250+AIM)

I'd say no. There's massive hype and arguments going either way but for me two points stand out

1) FB total valuation compared to there income/profit is way way below what your getting at google. Google in my opinion is the closest comparable match.

2) 900M users to date. How many possible users do you think there are in the world? how much possible expansion and growth does that leave?

2.1) Are you willing to gamble china opening up 1-2 billion possible users to facebook?

Sorry its a scattered response, getting to the end of an 11 hour shift at work and im shot.

WRT 2.1, more importantly can the Facebook platform serve those 1 billion in the same way that it serves the rest of the world? China has a very different culture from the US or Europe.

$100 billion valuation on $4 billion/year revenue(not profit)? No thanks, I'll pass. For perspective, Apple's $570 billion value is with $100 billion/year revenue. I don't care how fast they are growing, it's going to be a long time before you see any return on your investment (other than trendy mood swings with the market)

If you have lots of cash lying around you could always buy a small parcel of $1k worth of facebook stock. If Facebook bankrupts then the most you can lose is $1k. If Facebook performs anywhere near Google in the next 10 years then you will end up with $6k. For me, losing $1k doesn't feel too bad and I wouldn't feel bad about not buying more if it did end up going up to 6k. [1]

As long as I acknowledge it purely as a gamble I don't see any problems with investing in Facebook. I wouldn't invest my life savings, however. It might be a cliche but "Don't put all your eggs into one basket" is thoroughly explained by mathematics. http://en.wikipedia.org/wiki/Diversification_(finance)

[1] I am not making ANY recommendation whatsoever.

Since their service is free to users and they primarily generate revenue by ineffectively advertising to people who simply want to connect socially, I wouldn't say Facebook is a very sound investment. It is a battle between the users who want privacy and the companies who want user data, where the outcome could be that FB loses a ton of users or FB loses a ton of funding. FB also seems to have a lot of debt, which could hinder growth considerably since they don't have a ton of ways to make money or increase their customer base in the first place.

25. times. sales.

Say that a few times slowly. It's a lot more fun to go to vegas.

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