A few friends have asked me what I thought about The Facebook IPO and I don’t really get the excitement. First thing first, it has been way too long since I talked about things I don’t get! Some past examples include “I don’t Get why People Say they Don’t Want to be Wealthy“; “I don’t get the Early Retirement Movement“; “I don’t get Investment Services“; “I don’t understand the SWR discussion” there are a lot more if you check out my random or rant categories. I digress, there is such hype around this IPO and I just don’t get it.
I, like every other American, have and use facebook, but I, like every other American, use google and I don’t own that stock either. I, like every other American, use Microsoft products, but again, I don’t own that stock currently. Just because something is used doesn’t mean it is priced correctly as a Stock.
What I do see is a company that is being valued at 75 to 100 times its earnings which my gut screams is lunacy in toady’s market. Yes, it does have a moat with a 900 million member head start on any competitor and yes facebook has a passionate CEO but the valuation seems a little crazy to me right now.
I could see maybe a purchase on opening day in the hopes that the market goes crazy, and then selling shortly thereafter or even purchasing one of a few companies that guy in way before the IPO. MoneyWatch provides 6 publicly traded companies that own Facebook shares prior to the IPO maybe purchase those companies in the short term?
Although as of this morning LNKD in is selling at a crazy 600+ P/E so maybe I am the crazy one. LOL. Since I am going to go with me being the crazy one don’t listen to anything I say on here as investment advice.
Do you have plans to buy shares when they go public?