Ahead of Facebook’s IPO Clem Chambers, CEO of private investor’s resource ADVFN.com, has argued in a statement that questions remain about whether Facebook’s value is valid and if we are currently witnessing the Dotcom Boom Mark II.
Whilst providing Facebook advice to investors, Mr Chambers stated that “why wouldn’t the most pervasive web environment ever created not be worth hundreds of billions?” but cautioned that “If you think, like many, that the world is going to hell in a hand basket and that the U.S. is going to go bust under untold trillions of debt, then investing in Facebook is simply hiring a great suite on the Titanic.”
Full Statement:
Facebook’s impending IPO is a piece of stock market history in the making. Not since Google (GOOG) went public in 2004 has there been so much excitement and controversy surrounding a new listing.
How can Facebook be worth US$100,000,000,000? That’s roughly US$300 per American, or US$15 for every human breathing.
In reality of course, no one likes to value companies this way, especially when they are technological and financial juggernauts.
You shouldn’t think of the ratios, but the opportunity.
Remember, Facebook isn’t just a company; it’s a way of life for many. A miracle, a phenomenon, call it what you like, the social networking giant is undoubtedly not only the next big thing, it’s the big thing right now.
As its IPO looms closer, potential investors in Facebook seeking to make the right call should ask themselves whether it will prove to be the stock that bucks the market.
In reality you can’t buck the market. If you think, like many, that the world is going to hell in a hand basket and that the U.S. is going to go bust under untold trillions of debt, then investing in Facebook is simply hiring a great suite on the Titanic.
Yet it’s not only overall market conditions that need be considered.
Is the Facebook IPO just the Netscape IPO of dotcom Boom 2, i.e. the start of a crazy run that will see Apple above a trillion dollar market cap and lots of new Web companies springing up in a fountain of golden equity IPOs?
If we are in for dotcom Boom 2 then everything rises for the duration, Facebook, of course zooming into the firmament. If the market is in for a run then why wouldn’t the most pervasive web environment ever created not be worth hundreds of billions?
Traders should have their Level 2 and their Linkedin and Groupon historic intraday charts at the ready while bearish investors should stand well back. Dotcom 2 believers should dive right in and those short of beta in their portfolios should take a dab at the IPO.