Investors: How Much Do You Really Know about Investing in Facebook?

Some of you might remember, back in November 2011, we had an investment project posted on Merar, dealing with Facebook shares acquisition. An ex-member of their company, paid predominantly in shares rather than paychecks, has decided to open his own firm, through which he sold Facebook shares. The amount he was asking for was $57,750,000 with the reassuring voice of a wise entrepreneur, promising ROI of 100% or more. The deal realized $5 million, during its first day of trading.

However, things did not turned out as planned for the other investors. On the first day of their release on the stock market, Facebook share prices, declined substantially. The estimated IPO price for those shares was $65+, however it declined more than 50%, as shareholders scrambled to sell shares in what has been pitched as “the greatest growth story of the decade”. The value of the company fell instantaneously by more than $2 billion, as shares halted at $34.03. In August 2012 , the price per share stood at $19.44 and the total value of all shares was $41.65 billion. Facebook, once thought of as a $100 billion company, has gone down to $41.5 billion, with spectators doubting that even this is too high for its value. Google trades at 3.6 its projected revenues for 2014, so using the same price-to-sale Investing in Facebook Shares - Costs & Valueratio, Facebook will be worth about $29.52 billion, analysts argue.

Is Facebook really worth that much though? If it is, then why hasn't it done so well on the stock market? Because investors knew that the company isn't worth its share prices. Its market capitalization is above companies like Amazon, McDonald’s and even the Bank of America . However, some critics believe Facebook is not the future, as many will look at Facebook as the starting point and improve their business project from there on. Others view it as a one-off success and any further developments in that area would be doomed to failure.

The project we had on Merar turned out very well. Many investors benefited from the deal, however that was only during the first trading day. We can only assume what happened afterwards as the shares were halted. Needless to say, no investors were interested, after the catastrophic beginning for the Facebook shareholders. What's interesting though, looking at the info-graphic below is that the number of users increased by 41% over the next year to 526m. At the moment, it is estimated that over 845 million people have Facebook accounts and visit them every month and at least 200 million people log on to their accounts every day.

And yet, it doesn't guarantee a done deal.

Infographic source: Infographic Labs via infographiclist.com

Top image courtesy: Marco Paköeningrat, 2007, Flickr CC.