Kent State finance major buys into Facebook stock
DetailsCreated on Tuesday, 12 June 2012 22:02 Written by Kelsey Husnick Hits: 546
Chris Stoner, senior finance major, joins the growing number of people who have recently taken a gamble in the stock market and invested in Facebook.
Facebook went public on May 18 at an IPO — or initial public offering — of $38 per share, and investors had high expectations for the stock.
An IPO is generated by other companies and investors. They take the total number of shares the company is offering to the public and divide that number by how much they think the stock will be worth.
“The biggest reason I decided to buy into Facebook was the hype over the company going public,” Stoner said. “Facebook’s IPO was the most talked about arguably ever in IPO history.”
The problem is, the stock market has no guarantees.
“Experts were saying it was going to explode to $60 a share by the end of the day, which is absolutely unheard of, so the potential for gain was tremendous,” Stoner said.
He bought 28 Facebook shares at 9 a.m. the first day the company went public, investing a total of $1,064.
“Unfortunately, Facebook’s value did not explode right away,” Stoner said. “People began to fear the company was overvalued, which in turn made the price of the Facebook stock decline.”
Facebook stocks are currently valued at about $27 per share, making Stoner’s initial investment only worth $756. He said the loss disappointed him, but he still has hope for the future and doesn’t regret his decision to invest.
“I thought my investment would grow by 50 percent by the end of the first week,” Stoner said. “Facebook is a very popular global company with millions and millions of people involved. Just because Facebook didn’t live up to the initial hype, doesn’t mean it’s a struggling company. It still has a great opportunity to bounce back and grow.”
Other students said they are staying away from Facebook because it doesn’t make sense to take the risk when plenty of other companies are worth investing in.
Chris Day, junior finance and marketing major, is also a player in the stock market.
“Facebook, Groupon, Zynga and other social media companies are great businesses but terrible stocks, in my opinion,” Day said.
John Thornton, chair of the Finance Department, said no way exists to tell whether investing is a good idea.
“With a company like Facebook, essentially all of the value comes from its future potential,” Thornton said. “Your guess is as good or better than mine in that regard.”
Stoner said no one can be certain about investments.