The Facebook IPO has attained a celebrity status and warrants caution for all those would be buyers in the open market on IPO day. I hesitate to mention the roaring ’90s internet boom and bust, but when news comes out of people betting their kid’s college savings on Facebook, it’s a reminder of that irrational exuberance all over again.
The IPO alone will give Facebook a valuation of $106 billion at the current IPO price. The only reason I’d try to get in on the IPO is to flip the shares. I’ll gladly take the quick profit, knowing there is too many people willing to pay too much for a company that doesn’t deserve the valuation.
The biggest concern with Facebook going forward is how will it turn all those friends and likes into big dollar signs. So far it hasn’t found a way to do it. If you think Zuckerberg, and the Facebook crew will succeed in doing so, go ahead and buy. I’ll even wish you luck. But I’m skeptical and have a few reasons to be concerned about buying on IPO day:
1. There is too much of a novelty factor surrounding the IPO, just so people can say they own Facebook. Continue Reading…