Skip to comments.Surprise Winner of Facebook Mania: Google
Posted on 05/18/2012 9:04:12 PM PDT by nickcarraway
The search giant, up 7% since February, is benefiting from a halo effect, one expert says.
While Facebook (FB +0.61%) nabbed the lions share of media attention heading into its record-setting IPO on Friday, an older Internet giants stock was quietly rising.
Google (GOOG -3.64%) shares have jumped more than 7% since Facebook filed for its initial public offering on Feb. 2, while the Standard & Poors 500-stock index is down about 1%. How to explain this market-beating performance? Some analysts say Google is likely benefiting from the hype surrounding Facebook -- and the inability for most regular investors to get in on the IPO at a decent price. Its also seen as an attractive option for tech investors who cant stomach the risks of investing in newly public companies, says Devin Pope, a wealth adviser for Albion Financial Group in Salt Lake City. "Google is a way to get exposure to social media without the risks and some of the potential unknowns from a company like Facebook," he says.
Indeed, despite all the pent-up demand for shares of Facebook, advisers say there are plenty of reasons to not buy in. First, most IPOs lose money, studies show, with even the hottest stock offerings popping soon after their first day of trading. Young companies also havent shown they can earn stable revenue, making it difficult for investors to measure their true worth, says Pope. They may also make blunders when reporting their financial results, he says, as happened with Groupon shortly after it went public.
Google, on the other hand, has been reporting earnings for years and has demonstrated profitability, analysts say. It also maintains a strong hold on the online advertising business,
(Excerpt) Read more at money.msn.com ...
After the “Dot-bombs” of the 90s, a lot of people may not be is a hurry to invest on anything concerning the internet.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.