Starting today, Facebook users can interact with the social networking site in a new way ““ by investing in it.
Facebook is, for the first time, releasing shares of stock to the public. Officially priced at $38 each under the “FB” ticker, the company’s total shares will be valued at $104 billion, the most any company has been worth after going public, according to the Associated Press. Other large technology companies, such as Google, Pandora and Apple, are already publicly traded companies.
Stock market observers are expecting a large interest in Facebook shares, said Eric Sussman, a senior lecturer in accounting, finance and real estate at the UCLA Anderson School of Management.
“You’ve got a lot of pent up demand for social media companies and obviously Facebook is in a class by itself (compared to other social media companies),” said Sussman.
By offering shares to companies, initial shareholders can increase the value of their company, Sussman said.
Over time, the value of a stock can increase or decrease depending on the economic market. If the shares increase in value, the owner can get a larger return.
Facebook’s decision to offer people a share of the company is typically used by other companies to make profit, Sussman said. On Thursday, the Associated Press reported the company is raising at least $16 billion. Kate Matthews, a second-year biology student, said though she is not interested in buying Facebook’s stocks, her parents intend to invest in the company.
“You think Facebook’s kind of for college students, but the fact that my parents are getting involved is kind of a different aspect of (the company),” said Matthews.
Nathan Dillon, a first-year undeclared student, is considering purchasing shares because he believes Facebook to be a solid company, he said. But Dillon said he is still uncertain about how much money he will be able to make from Facebook’s shares if he does decide to invest in it.
Experts say students should be careful when investing in stocks for companies. Students interested in stocks should educate themselves in finance before making an investment, said Richard Roll, a chair of applied finance at the UCLA Anderson School of Management.
“Tread carefully; the likelihood is that Facebook stock will pop at the opening because of (high initial) demand,” Sussman said. “This is what happened with many of the social media stocks that have gone public, but those stocks are very volatile.”
Contributing reports by Fiona Kirby, Bruin contributor.