It’s been nearly nine months since the IPO of Facebook. The pre-IPO hype was rather frustrating for me. It was frustrating because the chatter I heard from people, “I have to get in on this, it’s going to be a goldmine.”
When it comes to making any type of investment decision (or any decision for that matter)….. Beware of hype! If the media and everybody is talking about it, chances are that investment is standing on sinking sand.
Why do I bring this up now though? I just read an article called “’Facebook vacations’: Droves of users take breaks of several weeks or more, study finds.” While I don’t think that Facebook is going away tomorrow, I think it is clear that a lot of the novelty is wearing off and it will only be a matter of time before something fresher catches on.
A lot of people got sucked into the hype of being part owner in Facebook by basing their decision on:
- Everybody is on Facebook now.
- Everybody is talking about the IPO.
But did they really look into the company itself, the industry that it is in, and what the future of the company itself looked like?
While I am not making any predictions on if you can make money by buying and selling Facebook stock now, it is pretty clear that those who bought in the IPO have a dismal outlook with the price of the stock still down nearly nine months after the IPO.
Check out these Facebook charts from ycharts.com.
Investments carry risk. And the greater risk you are willing to take on the greater the potential reward. But don’t take risks based what you hear the media and your friends talking about.
By nature, the Facebook IPO looked like a losing bet for outsiders. You had a lot of people interested in it simply because of the hype. That meant there was likely only one direction for it to go for the short and medium terms. As far as the long-term; social media is still in it’s youth so there is so much potential for a new king of social media to be crowned that several years from now Facebook may look like Myspace.
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