Would You Buy Facebook Stock?
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GM (General Motors) made a public announcement that it was pulling its ads from the social network (Facebook) even though demand for Facebook shares had gone up just prior to the first trade on Friday - IPO shares rose from 337 million shares to 421 million shares. GM explained that its main reason for pulling its ads was because it had little impact on consumers. The result was that many internet stocks went down due to this news. Some of the companies that were impacted on this news were Groupon, LinkedIn, and Pandora. In light of this news and the market reaction to internet stocks the real question about Facebook is how does Facebook intend to make money. Facebook has over 900 million users, but how do they get money out of those users and get it back to the company. Ed Butowsky, wealth manager, financial advisor, and managing partner of Chapwood Investment Management, joins Fox Business’ Varney & Company to discuss the reality behind the current valuation of Facebook and whether there is sufficient evidence to effectively measure the advertising they provide.
Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry. Ed is also a frequent guest on other networks such as CNN, NBC, ABC, Fox News, Fox Business, and Bloomberg to name a few.