Facebook’s IPO will hit Wall Street today. This hotly anticipated issue is expected to sell at a premium, but is buying the stock right away a good idea? This report at Yahoo! Finance includes an interview with Josh Brown of TheReformedBroker.com about the best way to buy Facebook shares. IPOs are typically risky, as Brown points out, and in Facebook’s case the social networking giant faces at least three critical challenges.
First, it needs to prove that it can grow advertising revenues on a mobile platform. Second, it needs to prove that the site is an effective advertising platform: Do ads lead to revenue? Third, it needs to prove that the site has staying power: Can it fend off inevitable competition? Investors can study the company’s financial history detailed in the prospectus, but they should ask themselves whether the company has been around long enough for them to assess how good management is.
Watch the Yahoo! Finance video here: http://yhoo.it/JO4zES
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