The 5 most important Criteria to use in deciding to sell Facebook stock

So I wrote this article for Seeking Alpha that I think you should check out.

I was asked by one of my former students who had shares in Facebook whether to hold them or sell them.

Obviously it’s a complicated question that required a complex answer but it did get me thinking about what the actual answer really was.

Here’s an excerpt from the article.

I like Vanessa (my former student) so I felt it was important to give her a more practical and usable answer.

I came up with the following five things I would look for when deciding whether or not to hold or sell Facebook stock.

An alternative platform makes Facebook number 2

I think people are looking at the alternative platform problem the wrong way. I don’t believe a new sexy platform can wipe Facebook off the map entirely.

They have widely implanted so many API’s over the web (likes, recommends, comments, etc.) that this company will be with us for a very long time.

What is more insidious and more likely is that an app could come along and become more interesting and profitable than Facebook and in more practical ways.

A new cooler social app that would be more PROFITABLE by getting users to spend their money online while they still used Facebook to socialize.

That I think would be a very bad sign.

You can read the full article here at Seeking Alpha.

Leave a Comment Below

  • Nice excerpt! Congrats on getting published on another site. The reason on here is a good one on deciding when to sell. If/when Facebook becomes #2, it’s certainly time to sell in my eyes! I already view it as on the decline in the long run.

  • You do a great job pinpointing that Facebook has accrued over a billion potential customers. That’s any companies dream. However, I do not use Facebook and haven’t really liked some of the decisions they’ve been making. I’m relatively low on them, but with all those customers as you mentioned, they’re obviously still a valuable investment.

  • Nice article. I’m not sure the truth to this, but I’ve heard a professor of mine comment on how Facebook and even Twitter to a degree aren’t AS profitable as the stock price or selling price of the company would suggest. He said this because Facebook, while it does have tons of users, doesn’t necessarily generate a huge ROI for advertisers because people can easily ignore it. Is there any truth to this or was he off base?

    • I’ve heard similar stuff. I’m not sure on the accuracy. I would guess Onuora has some more insight on it. I will say it makes sense though. I know I never look at ads on Facebook or twitter. My guess is ad companies believed it would be incredibly valuable, which it can be in a way, but invested too much money and aren’t see the returns they expected.

  • Bigger=better? Not always as you pointed out. Facebook may be larger than the competitors, but what if Twitter is much more profitable? if that’s the case, maybe it’s time to sell Facebook.

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