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Facebook hits the public markets this morning.The IPO was priced at $38 last night. That’s not the price you will be able to buy it at, though. That’s the price all the institutional investors, and clients of the underwriters get it at.
What price will you pay? It depends! The stock will probably hit the market trading in the $40-$50 range, and then it could explode higher, and then either settle at price for the day, or collapse, or skyrocket.
The open is at 11 AM.
If you want to take a guess about where the stock lands, log your vote here.
Now, before you dive in and decide to take a position one way or another, here are a few things you need to know about Facebook.
The company has 900 million users and it’s a very strong business. It’s earning $1 billion in profit on $4 billion in revenues.
However, everything is relative. As good a business as that is, it’s not Google good. It’s not Apple good. And at the current IPO pricing, Facebook has to be a much better business in the near future.
The company’s revenue growth has been decelerating at a rate that is worse than other hot tech companies prior to their IPOs. Part of the reason for this deceleration is that Facebook is IPOing at a later stage in its life than those other companies.
But, that’s irrelevant for investors.
So, what’s the bull’s case for Facebook? Unfortunately, it comes down to faith. You have to have faith that Mark Zuckerberg, Sheryl Sandberg, and the rest of the executives at Facebook will discover a magical money making product that will justify its valuation.
Right now, advertisers are trashing Facebook’s display ads. And the company seems to be flailing about searching for that next big revenue stream.
However, it has some of the smartest people on the planet attacking this problem.
So, the question for you, as investor, or just a person who wants to have a smart opinion is this: Are those people smart enough to find a spigot of money inside Facebook’s massive platform?
For more check out some of our best stories on Facebook and its IPO:
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