I was sitting in Starbucks as I often do in Bridgehampton, having a cup of coffee. Usually within five minutes of doing this, I get bored and like to read about the economy on the iPhone.
Most of my readers know that I enjoy talking about the stock market and playing stocks and I’m asked all the time about what stocks I’m buying. I frequently write about the economy in my column “Twentysomething” in Dan’s Papers. Anyway, while sitting in Starbucks a guy noticed me reading bloomberg.com and he asked me directly, “So you going to buy Facebook stock when it goes public?”
“I”m thinking about it,” I replied.
I’ve been thinking about buying stock in Facebook pretty much since it launced while I was still in college. I remember vividly seeing it and thinking to myself, “This is going to be huge, when this goes public, I hope I’m smart enough to get it.” Everybody at Northeastern Business School thought the same thing, and everybody has watched the company grow from a dorm room to a massive empire.
So the question is, am I going to buy the Facebook stock?
The short answer is yes, I’m going to buy Facebook stock. There is pretty much no doubt in my mind that I am going to buy it. I think the company is going to grow financially, and I think it is going to be one of the most powerful companies on Wall Street. It sort of already is as the frenzy over Facebook has fueled a typhoon of chatter about its IPO.
The long answer is, I’m not going to buy Facebook stock right away. It’s my personal experience that buying an IPO right away is a mistake, because the frenzy for the stock drives it up quickly for fantastic gains, and then everybody sells, dropping the stock, and that’s usually when I’ve bought. In general, I have a personal rule to not buy an IPO.
However, like Google, I very much believe in the business behind Facebook. Those that don’t think it does not make money are misinformed. Facebook makes money in a variety of ways, all of which are sustainable and have great potential for growth, and as far as I can tell, there is really nobody else in the game when it comes to social networking. Nobody really comes close. Facebook dominates, the question is, how are they going to use that influence to make a growing business?
Well, between taking a cut of the sales off of the games that are sold on Facebook as well a sophisticated display advertising platform that has the attention of every major corporation in the world, as well as a slew of ideas that they can continuously introduce, test, refine, grow or scrap, Facebook is a stock that I want to have.
I just don’t want to get burned during the frenzy, and that frenzy, especially for a legendary stock like Facebook, is always hard to resist.