Why the Facebook deal is so risky for retail investors. The entire article can be viewed at the link below. Despite its sizzle and investment sex appeal, purchasing Facebook shares is extremely risky for retail investors. Unlike many technology IPOs, at least Facebook is profitable. But great risks still exist. The company has an extremely limited operating history as the company was only founded in 2004. The company operates in an extremely competitive industry with many major, deep pocketed rivals and potential rivals like Google. In addition, most of the gains will be had by those who owns the shares prior to the shares trading publicly. At its anticipated IPO later this year, Facebook will be three times more expensive than Google was at its IPO— and nearly 40 times more expensive than the average large IPO of the last four decades. This investment poses significant risk to retail investors. We represented dozens of investors who got burned in hot IPOs in the late 90s. It is unfortunately deja vu all over again.
http://dealbook.nytimes.com/2012/02/01/investors-get-the-chance-to-assess-facebooks-potential/?scp=1&sq=Stoltmann&st=cse
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