Today’s installment is all about pride.
No, this posting is about that flavor of pride known as pride of ownership.
More specifically, I am taking about the ownership of stocks. Stocks, as in shares given out by a business to raise money in exchange for partial ownership of that company, are a mainstay of financial reporting as the daily fluctuations of stock indexes (e.g., Dow Jones, NASDAQ, S&P 500) are commented on. In addition, the share price of individual stocks are also reported on to show how well or not well a business is doing.
With the news all a-twitter about the upcoming initial public offering (or IPO) of stock by Facebook, people may be clamoring to attempt to buy Facebook stock to make money.
But is this even a good idea?
Looking at some of the most recent tech-world IPOs, the answer is mixed.
Groupon, that company that offers daily discounts, had their IPO late last year and shares of their company were initially offered at $20. The current stock price for this company is now around the $13 range. That’s almost a fifty percent drop.
LinkedIn, the networking on-line site, had its IPO almost a year ago and it offered its shares for $45. Now, one share of the company is in the $114 range. That’s more than a doubling of the IPO price.
The above to me says that IPO does not equal instant riches.
So, later this week, you can take your chance and try and buy Facebook stock and be proud of your new investment.
You can be proud of your new certificate of ownership, but if your pride also wants to see a double-digit increase in its price before you sell, just remember what goes before a fall.