http://www.profitableinvestingtips.com/investing-trading/is-facebook-a-good-investment - Is Facebook a Good Investment? - Is Facebook a good investment? The social media company is expected to announce that it will go public with an initial public offering, IPO, valued at around $5 Billion. If you are a big institutional investor and favored client of Morgan Stanley, who will be handling the IPO, you get to buy Facebook stock at the stated IPO price, before the stock goes public. If you are one of the rest of us you get to buy Facebook stock through your broker or on line after the stock goes public. Is Facebook a good investment for the large institutional investor that buys at the IPO price prior to stock trading? Typically it is. There a couple of factors here. One is that companies like Morgan Stanley engage in sophisticated technical and fundamental analysis of the companies they will offer at IPO. They commonly set the IPO price so that the stock will go up instead of down on the first day. They also try to set the IPO price so that it does not go up too much the first day. After all, the client, Facebook, wants to raise $5 Billion or whatever the amount will be. If they can get more they will but they do not want to issue $5 Billion worth of Facebook stock one day, see the stock price immediately triple, and see that people are paying $15 Billion for the same batch of stock the next day. If you are one of the rest of us is Facebook a good investment? To answer this we might want to ask ourselves just why this private company is selling stock. First of all selling stock allows a company to raise money without borrowing or drawing down on its cash reserves. However, the private owners of the company are giving away part of the value of the company when they do so. Do they need money? If so is the money for R&D or to pay off loans? Just how well is the company doing? Is the money they intend to raise from the IPO going to key employees as a reward for their hard work in building the company? Do these employees have stock options that they have been promised? If so, many key Facebook employees could get rich, just as others did, with Microsoft and other tech companies. Will employee stocks be issued separately or as part of the IPO. Will employee stock options dilute the value of Facebook stock? Is the money simply going into the pockets of the founders of the company? Everyone likes a little cash and maybe this is a nice way for the current owners of Facebook to diversify a little and not put all of their eggs in the “Facebook basket.” How to make money through investments is often to take your profits every so often and diversify a bit. This may be what the guys at Facebook are going to do. So, is Facebook a good investment for you and me? It will be if the stock price goes up and stays up. It will be a good short term investment for those who accurately assess fundamentals and market sentiment.

2. IS FACEBOOK A GOOD INVESTMENT?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

3. THE SOCIAL MEDIA COMPANY IS EXPECTED
TO ANNOUNCE THAT IT WILL GO PUBLIC
WITH AN INITIAL PUBLIC
OFFERING, IPO, VALUED AT AROUND $5
BILLION.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

4. IF YOU ARE A BIG INSTITUTIONAL
INVESTOR AND FAVORED CLIENT OF
MORGAN STANLEY, WHO WILL BE
HANDLING THE IPO, YOU GET TO BUY
FACEBOOK STOCK AT THE STATED IPO
PRICE, BEFORE THE STOCK GOES PUBLIC.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

5. IF YOU ARE ONE OF THE REST OF US YOU
GET TO BUY FACEBOOK STOCK THROUGH
YOUR BROKER OR ON LINE AFTER THE
STOCK GOES PUBLIC.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

6. IS FACEBOOK A GOOD INVESTMENT FOR
THE LARGE INSTITUTIONAL INVESTOR THAT
BUYS AT THE IPO PRICE PRIOR TO STOCK
TRADING?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

7. TYPICALLY IT IS.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

8. THERE A COUPLE OF FACTORS HERE.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

9. ONE IS THAT COMPANIES LIKE MORGAN
STANLEY ENGAGE IN SOPHISTICATED
TECHNICAL AND FUNDAMENTAL ANALYSIS
OF THE COMPANIES THEY WILL OFFER AT
IPO.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

10. THEY COMMONLY SET THE IPO PRICE SO
THAT THE STOCK WILL GO UP INSTEAD OF
DOWN ON THE FIRST DAY.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

11. THEY ALSO TRY TO SET THE IPO PRICE SO
THAT IT DOES NOT GO UP TOO MUCH THE
FIRST DAY.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

12. AFTER ALL, THE
CLIENT, FACEBOOK, WANTS TO RAISE $5
BILLION OR WHATEVER THE AMOUNT WILL
BE.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

13. IF THEY CAN GET MORE THEY WILL BUT
THEY DO NOT WANT TO ISSUE $5 BILLION
WORTH OF FACEBOOK STOCK ONE
DAY, SEE THE STOCK PRICE IMMEDIATELY
TRIPLE, AND SEE THAT PEOPLE ARE
PAYING $15 BILLION FOR THE SAME
BATCH OF STOCK THE NEXT DAY.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

14. IF YOU ARE ONE OF THE REST OF US IS
FACEBOOK A GOOD INVESTMENT?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

15. TO ANSWER THIS WE MIGHT WANT TO ASK
OURSELVES JUST WHY THIS PRIVATE
COMPANY IS SELLING STOCK.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

16. FIRST OF ALL SELLING STOCK ALLOWS A
COMPANY TO RAISE MONEY WITHOUT
BORROWING OR DRAWING DOWN ON ITS
CASH RESERVES.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

17. HOWEVER, THE PRIVATE OWNERS OF THE
COMPANY ARE GIVING AWAY PART OF THE
VALUE OF THE COMPANY WHEN THEY DO
SO.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

18. DO THEY NEED MONEY?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

19. IF SO IS THE MONEY FOR R&D OR TO PAY
OFF LOANS?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

20. JUST HOW WELL IS THE COMPANY DOING?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

21. IS THE MONEY THEY INTEND TO RAISE
FROM THE IPO GOING TO KEY EMPLOYEES
AS A REWARD FOR THEIR HARD WORK IN
BUILDING THE COMPANY?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

22. DO THESE EMPLOYEES HAVE STOCK
OPTIONS THAT THEY HAVE BEEN
PROMISED?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

23. IF SO, MANY KEY FACEBOOK EMPLOYEES
COULD GET RICH, JUST AS OTHERS
DID, WITH MICROSOFT AND OTHER TECH
COMPANIES.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

24. WILL EMPLOYEE STOCKS BE ISSUED
SEPARATELY OR AS PART OF THE IPO.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

25. WILL EMPLOYEE STOCK OPTIONS DILUTE
THE VALUE OF FACEBOOK STOCK?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

26. IS THE MONEY SIMPLY GOING INTO THE
POCKETS OF THE FOUNDERS OF THE
COMPANY?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

27. EVERYONE LIKES A LITTLE CASH AND
MAYBE THIS IS A NICE WAY FOR THE
CURRENT OWNERS OF FACEBOOK TO
DIVERSIFY A LITTLE AND NOT PUT ALL OF
THEIR EGGS IN THE “FACEBOOK BASKET.”
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

28. HOW TO MAKE MONEY THROUGH
INVESTMENTS IS OFTEN TO TAKE YOUR
PROFITS EVERY SO OFTEN AND DIVERSIFY
A BIT.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

29. THIS MAY BE WHAT THE GUYS AT
FACEBOOK ARE GOING TO DO.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

30. SO, IS FACEBOOK A GOOD INVESTMENT
FOR YOU AND ME?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

31. IT WILL BE IF THE STOCK PRICE GOES UP
AND STAYS UP.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

32. IT WILL BE A GOOD SHORT TERM
INVESTMENT FOR THOSE WHO
ACCURATELY ASSESS FUNDAMENTALS AND
MARKET SENTIMENT, BUYING ON
DOWNTURNS AND SELLING AFTER
RALLIES.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

33. IS FACEBOOK A GOOD INVESTMENT IN A
LONG TERM?
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

34. MICROSOFT MADE ITS EARLY STOCK
INVESTORS A LOT OF MONEY BEFORE ITS
STOCK PRICE LEVELED OFF.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

35. THE QUESTION FOR LONG TERM
INVESTORS IS JUST WHAT FACEBOOK CAN
DO TO FURTHER MONETIZE ITS NAME AND
TECHNOLOGY.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

36. STAY TUNED.
W W W. P R O F I TA B L E I N V E S T I N G T I P S . C O M

37. FOR MORE INSIGHTS AND USEFUL
INFORMATION REGARDING INVESTMENTS AND
INVESTING, VISIT
WWW.PROFITABLEINVESTINGTIPS.COM.