Amid the flurry of excitement, some skeptics have reared their heads about the Facebook initial public offering set to take place Friday.
Investing in internet IPOs is by no means a sure bet, The Wall Street Journal reported, offering the example of Chicago-based daily-deals website Groupon, which saw its value tank by nearly one-half since it went public in November (it opened with a share price of $20, and is now listed on Morningstar at $12.18).
No matter how many users the social network has, investing in the company and its long-term success is still a gamble (especially considering a poll released today showing that one-half of Americans consider Facebook a temporary fad).
Oklahoma-based lawyer Michael Belanger told The Wall Street Journal he thought the valuation was way off the mark, while Scott Schermerhorn, chief investment officer of Concord, N.H.-based investment-management firm Granite Investment Advisors called shares of the largest social network, “cult stock.”
Meanwhile, Jim Supple of Rockville Centre, N.Y., told the paper he was considering dumping his daughter’s college fund, currently worth $25,000, into IPO Facebook shares (after failing in January to purchase stock in the social network at an auction through secondary market SharesPost).
The price to play was high on the secondary markets, with $100,000 as the recommended amount in that case. Still, Supple considered tacking his 401(k) and IRA fund on to the college fund to make it happen.
Amid the skeptics, Chris Baggini, a mutual- and hedge-fund manager at Turner Investment Partners, who attended a roadshow meeting in Philadelphia with about 25 other executives, told the Journal the company is likely to participate. The firm nabbed some 700,000 shares of Google at its IPO share price, and on its first day of trading, a $10.5 million profit rained on investors.
Check out what Morningstar Analyst Rick Summer told the Journal about the prospects presented by the purchase of IPO Facebook shares. Hint: the post is titled, “Curb Your Enthusiasm.”
Readers: Would you risk your 401(k), a child’s trust fund, or your life savings to buy a bundle of Facebook shares?
Image courtesy of Shutterstock.