If you remember just a few months ago, the hype was at its highest, with Facebook (FB), the hottest IPO in years to hit the market, the next Google (GOOG), etc. Then the stock turned public, in what turned out to be a botched IPO thanks to both Morgan Stanley and Nasdaq. The stock gained for a few minutes before starting what has turned out to be an incredible decline.
No surprise in the fact that it got many investors upset…
Facebook No Longer The Cool Kid?
A few months ago, the Zuckerberg-led Empire was like that cool kid, that excels in sports, school, has tons of friends, etc. Facebook could do nothing wrong, all of its moves were seen as brilliant decisions from Zuckerberg, etc.
How Things Can Turn Around Quickly….
Just a few months later, reporters, analysts and others have shifted their focus to what isn’t going right at Facebook. The declining stock means diminished value for employees options which could lead to talented employees and execs leaving the company. Growing competition with Apple, Google, Twitter and others, etc. Really, there seems to be nothing going right at Facebook now. To many, the company will soon become the next MySpace.
Let’s Get Real
Facebook is already very profitable, is now trading at fairly attractive numbers and its best growth lies ahead…
Yes You Heard Me.. Growth Is Not Being Correctly Measured
How in the world can some see it as bad news that users are connecting by mobile? Facebook is the one site that visitors go to several times every day for news, photos and more. The fact that they are going more often is NOT bad news. Sure, short term, because Facebook has a revenue model based on advertising which it does very little of in mobile, it means a short term threat. But over the long term, users going several times per day (and thus mostly through mobile devices) is a good thing.
Actually, I bought Facebook last Thursday, as I wrote on Twitter (follow me @intelligentspec if you’re not already), I got a buy @ 19.999. As most of you know, I prefer to stay out of stocks in the first few weeks after an IPO, especially for shorter term bets. There is too much volatility. I had said that I would get in if the price was right once the stock would become more stable. It
Is There Risk? Absolutely.. Catching a falling knife is always risky. I just feel like the downside here is fairly limited, and I do intend to keep this position for a few years.. Risky? Yes. It’s all about Risk vs Reward though when I take a long term speculative investment.
Disclosure: Long Facebook ($FB)