The Facebook IPO frenzy is underway. But don’t call your stockbroker yet. Investors considering buying Facebook stock in light of the looming Facebook IPO might want to consult the history books first.
In 1998 TheGlobe.Com had the largest IPO in history at that time. With an opening share price of $9 per share, the stock skyrocketed to as high as $97 per share on opening day.
A year later the company was already in free fall. By 2001 the company was basically out of business.
Of course there are some big differences between Facebook and The Globe.
Facebook actually makes money. A lot of it. The Globe never made a dime.
Hundreds of millions of people use Facebook. The Globe didn’t have even a tenth as many users.
Facebook has a viable, understandable business plan. The Globe had no direction.
Facebook makes intelligent acquisitions based on strategic maneuvers. The Globe bought phone companies and game companies for no clear purpose.
Here are some modern-day facts:
- GM realizes 1000% better results running ads on Google than they do with Facebook.
- How Facebook can monetize it’s hundreds of millions of users in any meaningful way is unclear.
- Mobile use is exploding and Facebook admitted it makes very little money on mobile users.
Long story short: View the Facebook IPO with both eyes wide open. Don’t just buy the stock because you think you’ll make a killing overnight. Buy stock in Facebook because you’re sure it can make money in the long term.
If they can THEN you’ll be rich.





