Is Facebook Worth Buying?
Facebook made its debut Friday on Wall Street.
It closed at $38.23, virtually unchanged from where it began the day.
Financial advisers in our area have been asked by clients about whether or not to buy shares of Facebook.
Newswatch 16 talked to one in Wilkes-Barre who said there certainly is a lot to consider when buying a stock like this, and maybe now isn’t the right time.
Nearly one billion of us use Facebook. Now we can own some of Facebook.
But just because so many of use it is it worth an investment?
“I’ve had a few people call me during the last few weeks asking if they thought they should buy it and I would say stay away from it initially,” said financial adviser Larry Hamilton with Mid America Northeast in Wilkes-Barre.
He said on this IPO, or initial public offering, Facebook’s owner and big investors are the ones making big bucks.
“The man on the street isn’t cashing in today, he’s speculating. He’s hoping that some day this price will go even higher and some day sell it and make a big profit,” Hamilton added.
Facebook is free to use, so most of its revenue comes from advertising.
Some analysts wonder if the company’s value is too high compared to what it earns.
“While Facebook is the hot topic today who knows where we’re going to be three, four, five years down the road, even 10 years down the road. Facebook might be an afterthought just like AOL is almost an afterthought at this point. MySpace is almost out of business. Yahoo same story,” Hamilton said.
Newswatch 16 found a lot of people who use Facebook, but when we talked to them about how they use it, it’s not a way that’s going to help the company make money.
“I like Facebook because you can talk with so many people, you can connect, like I have family in Florida. It’s the greatest thing in the world, really,” said Katie Borst of Towanda.
But to make money, Facebook relies on you looking at the advertising.
“No, I just go on to check my friends check my mail, that’s pretty much what it’s about,” Borst added. “My mom thinks I’m nuts because I’m on a lot. I use my computer a lot and it usually dies.”
She may be young but she avoids the ads altogether.
“I usually X them out,” said Melanie Rittenhouse of Bear Creek said about the ads. “Sometimes I’ll click on them and then go their webpage but can’t say I’ve ever purchased anything from an ad.”
Facebook has found a way to reach nearly 1 billion people, and clearly there are many investors out there who feel that is a real good reason to buy in.