Is now the time to buy Facebook stock?

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Is now the time to buy Facebook stock?
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Facebook has had an underwhelming performance after its initial public offering (IPO) several weeks ago with its stock having lost a third of its value. Does that mean that now is the time for you to buy? Not so fast…

Before the IPO, I urged caution. Technology IPOs where stock that’s held by private parties and then is sold to the public always creates a frenzy. In this particular case, people use Facebook, they understand it, they feel connected to it and many even love it. That created a certain hype around the stock, resulting in the price being pushed up along with the number of shares being sold to the public.

Usually with an IPO, there’s a big burst in value upward on the first day that lasts for several days or weeks. But Facebook got too greedy, they put out too many shares at too high a price, and now they can’t sustain the level of the initial IPO.

Still, Facebook is a real company with real intrinsic value. The question is what value? The marketplace has not settled on that yet. So if you want in at this point as others scramble to sell, any money you put at risk in Facebook has to pass the ‘sleep test.’

That is, never put more money at risk — in any investment, be it Facebook or anything else — than would keep you from sleeping at night if you lost all that dough.

Meanwhile, did you know that your tween could be lying about his or her age to get on Facebook? The social media giant has responded by testing a kind of junior Facebook just for kids.

This tough modern parenting question brings to mind how important it is that you have a child’s email, IM, Facebook or any other credentials so you know what they’re up to. While a child or teen lives in your home, you have to set ground rules that you have all the passwords, monitor their online time constantly and have continuous conversations about the cyber dangers out there.

As a parent, what you don’t know can hurt your child.

Editor’s note: This segment originally aired June 6.

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Clark Howard About the author:
Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to put more money in your pocket, with advice you can trust. More about Clark
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