The Facebook Bubble?
Facebook’s long awaited IPO is under 2 weeks away and the opinions about it are very mixed. Many people are waiting to get a hold of their share of the “hot company” because they don’t want to miss out on the next tech stock to make them rich. Missing Google’s run and the most recent run of Apple is having people not fully thinking about what the IPO actually means.
Facebook Inc. (FB) is betting its growth prospects will persuade investors to pay 99 times earnings for its initial public offering, a higher multiple than 99 percent of companies in the Standard & Poor’s 500 Index.
Facebook is still growing, which is good, but at a decreasing rate. The valuation compared to sales and profits is beyond inflated. Take into account that Mark Zuckerberg will still have a majority vote and could still do what he wants is taking a lot of risk for people willing to invest in the company.
Renren’s IPO was a major disaster and while Facebook might last a bit before it pops I feel like it will happen. The social network that has become so intertwined in our lives that it has many people getting sick of it, myself included. Mark didn’t see Instagram as a great acquisition to buy to integrate with Facebook, he saw a severe threat that did what Facebook couldn’t on a mobile platform.
Everyone is always looking for the next “hot stock” to make them rich, but will people regret investing in Facebook this like they did Groupon? Will it follow the path of Renren or will it actual live up the expectations that people are putting into it?