Facebook: The Dangers of a Half-Off Sale

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Facebook shares went below $19 a share for the first time earlier this week. That put it at just half of its IPO price of $38.

But don't buy Facebook just because it's come down 50%. Just like you shouldn't shun Apple simply based on its record-beating market capitalization, you shouldn't buy Facebook because it's trading lower. Remember that Facebook is still valued at over $40 billion. That puts it well into the large-cap area populated by proven long-term businesses. To buy Facebook, you have to believe that it can better monetize its over 900 million users, both on computers and on mobile devices. That was certainly true at an $80 billion price tag, but it's still true at $40 billion. Analyst Anand Chokkavelu explains in the video below.

After the world's most hyped IPO turned out to be a dud, most investors probably don't even want to think about shares of Facebook. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There is a lot more to this company than meets the eye, so read up on whether there is anything to "like" about Facebook today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here

Anand Chokkavelu owns shares of Apple. Andrew Tonner owns shares of Apple. The Motley Fool owns shares of Apple and Facebook. Motley Fool newsletter services recommend Apple and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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