Facebook Is A ‘Fad’ Stock, Says Business Expert
Got a few thousand you're thinking of investing in Facebook? Hold on, and read this before you do, says Wall St. Expert.
Elizabeth McDonald, who publishes the popular Emac's Bottom Line on the Fox Business Network, says beware of the initial Public Offering on the monster social network. With the raging popularity of the world's most used social network, you might ask 'why?' Consider these reasons, from McDonald:
Facebook to me is a phenomenon of the economic downturn. It added hundreds of millions of people during the last decade when the U.S. saw not one but two recessions, the last the worst since the Great Depression. Economic growth is the worst since 1950.
People bunker down during downturns, they nervously log on and network to see about jobs, to check in with friends and family across the country, to do anything to feel better. Once an economic recovery kicks in, they may ditch Facebook to, well, make money, look for new houses, travel, work hard at their new jobs, you name it.
But now, as its expected offering price grows to a nosebleed 70 times earnings, Facebook is being valued as if the whole world will ditch their cell phones and landlines to only talk on Facebook, as well as only read news, business or entertainment headlines on the site.
Scary, because Facebook is built for the age of desktop or laptop computers, and not the age of mobile phones or the smart phone era -- which Facebook just basically admitted to in a recent filing with the Securities and Exchange Commission about its IPO.
That last point makes pretty good sense. We at Newstalk 870 are still getting completely used to our 'smart phone' (Droid) but have mastered most of the basic uses people get them for. Have you noticed the difference between trying to interact on Facebook using a laptop or desktop as opposed to your mobile? Hmmm. Of course this is one person's opinion, so if you're thinking of investing, check with people who know the stock market very well, and decide for youself.