Thursday, February 2, 2012

Why I won’t be participating in the Facebook IPO

In my opinion, the only people who will be getting rich off of the Facebook IPO are people who already have shares of stock in the company, pre-sale. Everyone else: avoid it for a long time.

Here’s why:
·      Early adopters beware. Tech IPOs have been notorious for jumping up initially and then crashing down to a price lower than the initial IPO.
·      I don’t like Facebook as a product. The interface has always been clunky and it won’t be long before the new “timeline” feature automatically replaces that photo of you puking on a clown with an ad for a fabric cleaner. Puke.
·      Its prospects for growth are suspect at best. Facebook has nearly a billion people already signed up. But how many more of the 6+ billion people on earth really have access to the Internet? Yes, you could say there’s 80% of the market untapped, but I question how many people will still sign up if they haven’t already.
·      Their ad model sucks. I have never clicked on a Facebook ad and I doubt many of my friends have either. Sure, a few suckers might be “fans” of brands, but those brands are probably providing some sort of value. A crappy banner ad … not so valuable to me, the consumer.
·      What, exactly, do they produce? I bought some shares of Home Depot for $21 and they are now worth close to $45. Why? Because people in civilized countries will always have a need for raw building materials. Up-to-the-minute updates from my narcissistic friends*? Not so essential.
·      MySpace. Just sayin’.

*You know who you are, don’t you?