Is Facebook stock still worth buying?
This is the question that a lot of people have been asking since Facebook began being traded publicly last Friday on the NASDAQ market.
The stock price has dropped considerably so far – from its starting price of $38 / share down to $31 / share – mainly due to some mishandeling in the paperwork and documentation by one of the primary underwriters for the Facebook IPO, Morgan Stanley.
Additional concern has arisen due to the fact that, after going public, Facebook altered some of their revenue projections from their mobile apps.
The simple answer to this question is, definitely not!
In fact, because there is so much controversy right now that is causing the stock price to drop, it may be an even better time to buy while the price is still low.
The reason that buying shares in Facebook is a good long term investment is simple: Facebook has a user base of nearly 1 billion people!
Of those 1 billion users, Facebook claims that over 500 million of them are daily active users.
Let me put this in perspective for you, the 2012 superbowl (the most expensive advertising event on TV) averaged just over 100 million viewers at any given time.
To repeat, Facebook has over 500 million user every single day, viewing multiple pages a day!
To top it all off, Facebook is a marketers dream!
When advertising on Facebook, marketers can specify exactly which users should see their advertisement based on sex, age, location, likes and hobbies.
Since the beginning of marketing, marketers have been looking for a way to target exactly the users they want and Facebook allows them to do this – with an active user base of 500 million people.
If you add all of the above factors together, it seems foolish to think that Facebook will all-of-a-sudden cease to be a popular and profitable service.
Facebook is going to use their recently acquired capital to find more effective ways of advertising to their users.
Facebook will also leverage the mobile development team that they acquired from Instagram to flesh out their mobile apps and implement more effective mobile advertising.
Bottom Line: Facebook is going to make money – lots of money! If you’ve got the time and money, Facebook is a great company to make a long term investment in.