Could Facebook Join the Dow?
The thought of Facebook (NAS: FB) joining the Dow Jones Industrial Average (INDEX: ^DJI) after its disastrous initial public offering should be laughable. Since going public nine trading days ago, amid claims of financial malfeasance, shares in the social media giant are down over 35%.
At the same time, however, a look at the current composition of the Dow could easily lead one to conclude that it's not as big of a stretch as it may at first seem.
To attain membership on the index, a company must ostensibly satisfy three requirements. According to the index's official website: "A stock is typically added [to the Dow] only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors." Assuming it meets these conditions, the company must then be chosen by the editorial board of The Wall Street Journal, the crown jewel in Rupert Murdoch's evil media empire.
Now I know what you're probably thinking: They don't really care about all three of these things. I mean, let's get real, Bank of America (NYS: BAC) and Hewlett-Packard (NYS: HPQ) are components, neither of which is particularly known for having an excellent reputation and/or a record of sustained growth of late.
And that's my point.
On the one hand, if they don't care about these qualifications, then why not add Facebook? At the very least, there's no question that it's one of the most popular companies, not to mention stocks, in the world right now. My colleague Eric Bleeker even recounted a story about a woman who wanted to buy its stock even though she didn't know how to buy stocks in the first place. And lest we forget, fumbled IPO aside, it remains one of the great online platforms along with Apple (NAS: AAPL) , Google, and Amazon.com.
On the other hand, if they do care about these qualifications, then there are bound to be two slots opening up in the not-too-distant future. For the reasons just mentioned, in turn, if this were to happen, Facebook may very well be a worthy contender -- though my money's on Apple.
Got burned by the Facebook IPO?
Check out our recently released free report about a company that operates in Facebook's shadow but has a number of hidden weapons that keep it from falling into the social media giant's advertising trap. To access this free report while it's still available, click here now.
At the time this article was published Fool contributor John Maxfield owns shares of Bank of America. The Motley Fool owns shares of Apple, Facebook, Bank of America, Amazon.com, and Google.Motley Fool newsletter serviceshave recommended buying shares of Google, Amazon.com, and Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.