Would you buy Facebook stock if you could right now? by ZURB

Would you buy Facebook stock if you could right now?

The Q&A series is where we ask influencers and friends of ZURB for their opinions on hot recent news. This week we were curious about people's take on the recent Facebook news so we asked the following people this question below.

Question: Would you buy Facebook stock if you had the option to right now?

Duff McDonald published a controversial article stating five reasons of why he would not buy Facebook stock. Duff talks about how Facebook's $50 billion valuation number is inflated, how most of us are in the dark about their stats and numbers, and how it's tough to justify a $50 billion market capitalization through banner ads. We are curious - would you buy Facebook stock?

I'm generally on the side of Warren Buffet (and common sense) in these matters. When everyone else is excited about Facebook it's a great time to sell; when they're down in the opinion polls, it will likely be a good time to invest. They are certainly an exciting company and they make an incredibly popular, world-changing product. The issue with buying their stock, however, is not whether these facts are true, but whether the market believes them to be even more exciting than they really are. To my mind, that's almost certainly the case.

-Rand Fishkin, CEO at SEOmoz

Depending on the amount of money we're talking, absolutely. For one thing, I'm a huge proponent of the social web, and Facebook clearly has a handle on that. With what they've done with Facebook Connect and establishing reusable identities on the web (and someday the real world), I think they're one of the earliest successful "data capitalists". And that, to my thinking, is worth being an investor in.

-Chris Messina, Open Web Advocate at Google

Well, I'm continuing to hold the stock I own, so I guess that's pretty close to a yes. Looking at current numbers is not a very useful way of evaluating something like Facebook. They own one of the most valuable assets in the world, and have no real competitors, so I continue to believe that they are quite valuable.

-Paul Buchheit, Gmail Creator, Founder at FriendFeed

Me? I'd buy Facebook stock in a minute. Why? Mostly to say I bought it, but I think it'll be the most successful IPO in history.

-Robert Scoble, Tech Blogger & Managing Director at Rackspace

What is your take? Leave your answer in the comments.

16 comments

MYGRampage says

Never! Facebook should never have gotten so big. I personally warn people to stay off it.

Dmitry (ZURB) says

@MyGRampage Is this a personal choice? Is it just because the company is large? Could you elaborate a bit on your reasoning?

Colin Henderson says

No, based on the Goldman Sachs terms, and here is why. My initial investment is down by 10% due to upfront fees before I start. So FB has to be worth closer to 60 bn just for me to break even. I am locked into the GS deal for 3 years until 2013.

Then to make a return of say 30% by 2013, which equates to 10% annually I have to be confident that the market for FB stock will continue to hold my 30% appreciation until 2013 and liquidity returns to the stock. Will we have another crash before 2013? Will FB value be more than $50bn over time?

Lots of one way bets with lots of downside and at best only a potential upside.

MYGRampage says

I've never liked the fact that you lose your intellectual copyright on anything you choose to post. In my opinion (for what it is worth) I think that people assume that Facebook is secure because it is a household name, when I would think it is quite the opposite. I guess FB reminds me of the local bars in my university town (way back when) which could be massively popular one year, only to be empty the next year. From my experience, young people do what the masses dictate. That kind of social behavior is fickle and can be short-lived. I would not be surprised if FB became yesterday's fad, giving way to whatever the new 'thing" happens to be. Remember ICQ, or MySpace (to a lesser extent)? Just my opinion.

Dmitry (ZURB) says

@Colin - Yes buying stock in general is a risky business. You're correct in saying that we do not know the future. Same goes for tons of other companies. Curious to hear what makes Facebook a much more risky stock to buy for you compared to other companies? Also - curious to hear how you came up with the 10% figure for the fees? It seems a bit off.

strandev says

Given a set amount of money, is Facebook the best investment vehicle? I can think of lots of other companies that are more interesting from a risk/reward perspective.

Mr.John says

there's a problem with link given to Robert Scoble, its http://http//scobleizer.com pls correct that :)

Ian says

No. They're clearly wayyyy overvalued. If you had stock from pre-IPO, you'll get rich, but after that, they have no way to build real, measurable value.

That COULD change. But right now? Forget it.

wojteksz says

Yep, I'd buy a bunch however exit strategy depends on FB road map. If FB is going to invest in some game changing areas of technology like new energy sources, pneumatic vehicles, bio buildings or something like that then I am sure I kept my stock for a while. If not however I would sell them just after price were skyrocketing (Day+1 perhaps) because situation possibly is going to look just like this energy diagram

energy diagram

Dmitry (ZURB) says

@strandev Thanks for the input. The contrary argument to that of course is that there are less risky investments which might yield a sustained growth over time. Have you read this post on similarity of MySpace "winning" and Facebook following it's steps?

@mrjohn Thanks. Fixed.

@ian Could you elaborate on what you mean by "This could change but right now forget it?"

Dmitry (ZURB) says

@wojteksz Thanks for the diagram. Seems like you're in agreement with Ian from the comment before yours. Love the visual representing what you think will happen to FB stock. Do you feel like FB's investment in new energy sources, pneumatic vehicles, bio buildings will make your FB shares more valuable? You'll earn more revenue per share with these investments?

wojteksz says

Dmitry: First of all please note there is no time and value scale defined on the diagram (no 0 point marked) - but yes - I think it is highly possible scenario. Why? Because far too many people want to be rich without effort, without creating a value.

Do you feel like FB's investment in new energy sources, pneumatic vehicles, bio buildings will make your FB shares more valuable?

Define valuable ;-) sometimes It's not about money ;-) For me it will be more valuable.

You'll earn more revenue per share with these investments?

Probably yes. Look, how could FB continuously grow their value in wider time scale? By adding more and more features, finally reaching the point of enormous "social-CRM" by the 2020? I really doubt this would be a good direction.

Of course I am just guessing but hey wouldn't be this fun to keep a share of such company? ;-)

Dmitry (ZURB) says

@wojteksz Sounds good to me! I'm in. Lets buy some shares! :) Haven't seen too much talk of FB investing in energy though. :) Would still love to gamble on a few shares of their stock though. :)

Bryan (ZURB) says

Well if you think Facebook is overvalued at $50 Billion, how about $70 Billion?

http://techcrunch.com/2011/01/14/facebook-shares-hit-28-26-per-share-thats-a-70-billion-valuation/

Anyone remember Geocities? That story didn't end up to well for the site, but the initial investors did pretty well :) http://news.cnet.com/2100-1023-220817.html

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