Do Your Homework Before Investing In 'FB'
By Vince Hill
PHILADELPHIA (CBS) - It was born in a Harvard dorm, spreading like wildfire through colleges across the country. Now, after its IPO, Facebook is worth $104 billion.
For Wall Street deal-makers trading shares of FB (the social network's ticker symbol) this morning, the price was set at $38-a-share, but was expected to sky-rocket from there.
It would be a good idea to be extremely cautious with this investment.
READ: Facebook prices IPO at $38 per share
Many industry experts believe Facebook will be just as popular as or even more popular than the Google IPO as far as Wall Street is concerned. Sheyna Steiner, an investigative reporter for BankRate.com, says there's a split with investors on who will buy and who will wait.
"The Motley Fool did a survey asking everyone if investors are going to buy Facebook and it was mostly novice investors who said they were very interested in buying shares. People who have a lot of experience investing said that they would probably sit it out. And that was like two people out of 10 who are very experienced versus twice that for novice investors."
Steiner says just because you like the website, it's no reason to buy into the IPO.
"A lot of critics have said that Facebook might not be worth what it's currently valued at. And you really have to do your homework. And look at how it's valued today versus the earnings for the past year and decide if you think they are going to live up to their sales pitch or if they're not. It really does take homework; not whether you like the website or not."
Steiner warns the volatility of IPO's may be unexpected by the novice investor. Critics contend the company is overvalued. You'd be advised to read the prospectus carefully.
