If you’re ever at a party, but there’s no one actually “partying,” what do you do?
Easy solution:
Limbo!
People love the limbo. It’s funny, actually.
It doesn’t matter whether it’s a pole, a belt strap, or a jump rope – people love walking under objects with their backs bent.
“How low can ya go? How low can ya go?”
It’s a common chant that will certainly get any party-goer aroused. I can only think of one party where the chant has a negative connotation.
The Facebook IPO Party
In May of this year, my boy Mark Zuckerberg rang the opening bell for the NASDAQ stock exchange in the middle of Facebook headquarters. It was the day that turned 20-year old techies and graffiti artists into millionaires.
Back in December, I showed everyone How Facebook Makes Money.
In May, I told everybody about the risks of investing in Facebook’s IPO.
But still – people chose to invest. And (as I’m sure you’ve heard) they’ve lost a lot of money. Approximately 40% to be exact.
Should I Buy Facebook Stock Now That It’s Gone Down?
Most people are scared of falling stocks. I, however, love nothing more. That’s actually not true. I love Miss Blinkin more. And I love the feeling of warm towels, too. But discounted stocks are a close third.
Not to change the subject, I would typically look at this recent drop as a buying opportunity. Although Facebook’s growth has been declining, it’s still a quality company with a lot of potential. It was heavily overvalued at first but now that it’s “50% off,” what’s not to like?
Why You Shouldn’t Buy Just Yet
If you’re looking to join the Facebook party right now, I would tell you to hold off for just a bit. On August 16, the IPO lock-up period expires. This lock-up period prohibits company insiders and majority stakeholders from selling any of their shares. This is a way to make sure the market isn’t flooded with too much supply. In Facebook’s case, it means that Goldman Sachs and Microsoft can begin selling shares.
To put things into perspective, there are roughly 500 million shares currently. After the lock-up periods expire in the coming months, the available shares for trading will increase to around 1.6 billion.
If you took an Economics course in college, you probably remember supply and demand. The law of supply and demand says that if supply goes down, the price will go up. If supply goes up, the price will go down.
I will leave you with that.
