Living with credit

Good news or bad? I got the Facebook IPO stock

Connie Prater

The good  news is that I got in on the biggest Internet stock initial public offering (IPO) in history. The bad news, if you believe all of the analysts who have warned about overvaluation and low chances of future earnings growth, is that I bought Facebook stock.

I’m still thrilled. It’s extremely rare for a small potatoes investor like me to be able to get in on an IPO.  eTrade sent an email early this morning alerting me that they have fulfilled my request to buy FB (as the social media giant will be known on NASDAQ when public trading begins) had been granted. I asked for 100 shares. I was able to buy 50 shares at $38.

The Facebook IPO frenzy has been high. Seniors in Florida were clamoring to get in on the IPO. A dad in New York state wanted to bet the $25,000 he has saved so far for his daughter’s college education on the IPO. After thinking about the risks, though, he appears to have backed down.

Warren Buffett, the billionaire investment guru, has been widely quoted as saying he would stay away from the Facebook IPO because of the frenzy surrounding the stock. He called the company an extraordinary business. And said he was an agnostic on the IPO because putting a value on such an extraordinary business is difficult.

“They are the hardest to value,” he told CNBC.

To me, Buffett’s words weren’t damning at all. He will sit on the sidelines for the IPO and watch the stock’s progress. And just as there were naysayers about the stock, there were also supporters.

Media Post blogger Dave Morgan is bullish on the IPO and touts its potential as a media company and a payment platform for its Facebook Credits.

Investment author Josh Brown recommended avoiding the IPO: Once it starts trading, its going to go a premium price, he says, and advised to avoid investing money they will need right away.”This should not be the cookie jar money or the money that you may have the use for to pay for a kids college in six months,” Brown says.

Not to worry, I’m not betting my retirement fund on this thing. Just a little “play” money — the equivalent of a couple of Vegas gambling trips including hotel and airfare costs. My 50 shares aren’t going to move markets or put me in the poorhouse.

I still expect a roller coaster ride as CEO Mark Zuckerberg and crew plot the future of the company. Again, I’ve strapped on my seat belt. I’m ready.

See related: I want in on the Facebook IPO, but I’m just small potatoes

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  • Hello Connie.
    Yes, it’s really exciting to get into biggest internet stock public offering. However, there are many negative speculations about Facebook value in the future, etc. But after all…
    Who knows everything for sure?
    We can only guess, only time will show.
    Personally I would not buy any internet company stocks (maybe with few exceptions, with better business model). Things are changing so fast in the internet, users like something today and toomorow they move to something new. It’s just my point of view on this.
    Good luck with your shares and I hope you will make some money atleast!

  • Simon, I agree that only time will tell on the Facebook stock. I went in to it knowing the risks and gamble. It is risky business.
    It’s true that the Internet is changing. But I’m betting that Facebook changes as well, particularly with regards to developing into a payment platform for users.
    Also, many Facebook users have many of their photos and videos uploaded to FB servers. I think that tethers and engages them in a way we have yet to see play out. They can walk with their feet to the next social networking phenom. But the albums they’ve created remain with FB.
    I’m currently losing on the FB deal, but the price that counts is the one I sell it at, not what it’s trading at now.
    It’s like those election season opinion polls that ask if the election were held today, would you vote for Obama or Romney. To quote the late Detroit Mayor Coleman Young, who I had the privilege of covering as a municipal reporter years ago: “The only poll that counts is the one on election day.” I feel the same way about stock prices. They rise and fall.
    Also, to put this in perspective, I don’t consider this a major investment. I bought the minimum number of shares allowable in the IPO. This is small potatoes.
    I’m intrigued and interested to see how the class action lawsuits over the botched IPO turn out.