Financial consultant urges caution when buying into Facebook - FOX Carolina 21

Financial consultant urges caution when buying into Facebook

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Friday, the largest social network in the world is opening itself up to the stock market.

It seems investor demand is already high for Facebook stock because it's already priced its IPO, or Initial Public Offering, at $38 a share. Experts say that's on the high end of the range.

Facebook's IPO is the third largest in history though the largest technology company IPO. It's been hugely popular as a social network, but as Greenville financial consultant Cal Drummond said, U.S. Facebook users only make up 20 percent of its total users. He said the Facebook IPO craze hasn't been as hot internationally, as compared to America.

Drummond said Facebook's timing is perfect. After J.P. Morgan took a nose-dive, many investors are looking for new options, but Drummond said he doesn't see the social network stock as a total sure bet.

"Understand that this is newly issued stock," said Drummond, "and people have to remember companies like Groupon, their IPO is right around $28, and it soared the same day that it issued about 41 percent and now it declined about 50 percent of its initial public offering within, less than a year's time. So people have to understand the past effects a lot of what Facebook will do."

Drummond said Facebook is definitely a strong company, but he does expect its stock to fluctuate. He said if you're an individual investor - unless you can, as he said, "stomach" the ups and downs - he'd wait a month or two to see how the numbers go.

Drummond does say that with such a big interest, and the fact that so many people are planning to invest, just getting that money out into the pot will likely help boost the economy as a whole.

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