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Is Now The Time To Invest In Facebook?


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Why Many Investors Chose Not To Invest In Facebook Post IPO

Invest In FacebookWith Facebook’s stock (NASDAQ:  FB) losing more than half of its value after the company’s Initial Public Offering (IPO) during the spring of 2012, investors are asking:  is it finally time to invest in Facebook?  Before answering whether now is the time to invest it Facebook, it is useful to examine why Facebook’s stock did so poorly after the IPO.

Investors were spooked by Facebook after the IPO when word got out that Facebook had reduced their revenue projections due to more Facebook users switching to the mobile Facebook app.  The uncertainty surrounding the new mobile paradigm that Facebook was operating in caused investors to sell Facebook’s stock, which resulted in a loss of more than half of its IPO valuation.

Why It May Finally Be Time To Invest In Facebook

The reason why it may finally be time to invest in Facebook is because the company has addressed the questions on the investment community’s minds regarding whether or not Facebook can monetize the mobile app version of Facebook and generate sufficient revenue to someday earn profits.  Facebook’s third quarter 2012 quarterly report indicated that revenues from mobile app advertising was up 1000% from $ Million to $1.2 Billion.  While Facebook actually reported a loss of $ Million in the third quarter of 2012, Facebook’s stock reacted to the positive mobile app advertising news by jumping approximately 20%, as many took this news as an indication that it is time to invest in Facebook.

Facebook also announced during the third quarter of 2012 that the number of Facebook users passed the 1 Billion user threshold for the first time.  With a growing user base and their monetization strategy for the mobile app version of Facebook apparently working, many investors from individual investors to large fund investors are taking a second look at Facebook and concluding that the time has finally arrived to invest in Facebook to capitalize on the company’s long term growth potential.  Of course, like any fast growing company in the field of Internet technology, many questions remain regarding Facebook’s future growth prospects.  However, Facebook has just begun to monetize its platform, and the mobile app monetization is just one facet of the potential that Facebook has to monetize its huge user base and to grow revenue and earnings in the future.  Facebook appears to be approaching the sweet spot of high future growth that makes it easier for investors to invest in Facebook based on fundamentals.

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