Is Facebook Stock a Bargain?

“Small Investors May Get to Own Bit of Facebook.”

–Headline, The New York Times (5/4/2012)

“I would never want to belong to any club that would have someone like me for a member.”

–Groucho Marx (oft-quoted by Woody Allen and many, many others)

Is Facebook stock a deal at a projected price of $28 to $35 a share?

Maybe — if you paid $2 or $5 a share (or 50¢) for your stake, as many venture capitalists and early investors did.

Or if you’re a trader poised to take a quick profit off any first-day “pop” in the stock price.

But, if you’re a plain Jane, “retail” investor, for the stock to be a long-term winner, the company will have to grow into its $86 billion market cap, and not only sustain its torrid expansion, but fend off equally smart and rich competitors like Google and Apple.

So, here’s one more parting observation, courtesy of Warren Buffett:  ‘if you’ve been playing poker for half an hour, and you don’t know who the patsy at the table is . . . it’s you. ” 

P.S.:  Another blemish on Facebook’s stock (besides its lofty valuation):  a voting structure that concentrates effective control amongst a handful of insiders.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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