We're answering your top-searched finance questions of the year according to Yahoo search. The number six most-searched question was: “Should I buy Facebook stock?”
If you're asking, and so many of you did, the answer is probably yes. As always, though, there’s a but, so read on.
Facebook (FB) has been public for a couple years (since May 18, 2012 if we’re being specific) but it was only about 18 months ago that Facebook established itself as a real force to be reckoned with for the long haul.
In the summer of 2013, Facebook's IPO was still widely dismissed as a debacle. Mark Zuckerburg was still just a coder in flip-flops and a hoodie with a business model that didn't make much sense. Then suddenly, on July 25th, Facebook announced a huge earnings beat.
That wasn’t exciting in and of itself – companies report “better than expectations” earnings all the time. What Facebook managed to do that quarter was make a ton of money through mobile advertising on its app. In English, the company justified not just its own existence, but the entire mobile space. It's not at all a coincidence that Twitter (TWTR) was public within 6 months.
So, back to the question: “Should you buy Facebook stock?” Probably, but with two caveats. First, this stock is risky and even a “Best of Breed” play like Facebook is going to see some share volatility. Second, only if it's part of a balanced portfolio. Don't bet it all on any single stock. Not even Facebook.
More of your top finance questions answered:
Number 7: Why are gas prices going down?
Number 8: Who is the richest man in the world?
Number 9: Is social security taxable?
Number 10: What is Bitcoin and how does it work?