Buying shares of Facebook stock allows you to own a portion of the company and benefit from any increases in the share price. Here are some key steps to buying Facebook stock:
Decide how many shares you want to buy
Facebook trades on the NASDAQ stock exchange under the ticker symbol FB. You can buy as little as 1 share or as many as you can afford. The current price for a single share of FB is around $150.
Choose a brokerage firm
You need a brokerage account to purchase stocks. Online brokerages like E-Trade, Fidelity, Charles Schwab, and TD Ameritrade allow you to open an account online and trade stocks from your computer or mobile device. You’ll need to fill out an application and provide information like your Social Security number, contact details, income, and employment status.
Deposit funds into your brokerage account
Once your brokerage account is open, you’ll need to fund it with cash so you can buy shares. Most online brokers allow you to transfer money electronically from your bank account. The funds need to settle in your brokerage account before you can use them to trade. This usually takes 3-5 business days.
Place your stock purchase order
When you’re ready to buy Facebook shares, log into your brokerage account and enter a market order for the number of shares you want to purchase. Specify that you want to buy FB stock at the current market price. Your broker will charge a commission for the trade, typically $5-$10.
Monitor your trade and holding
Once you buy the shares, you’ll see them listed in your brokerage account. Facebook will pay a quarterly dividend, typically around $0.50 per share, which gets deposited into your account. The share price will fluctuate daily based on market activity. You can sell your shares at any time if you want to take profits or cut losses.
Buying Facebook stock via a robo-advisor
In addition to traditional brokerages, you can also buy Facebook shares through robo-advisor investment platforms like Betterment and Wealthfront. These allow you to open an account, deposit funds, and invest in selected stocks or funds often with minimal or no trading commissions. Robo-advisors will purchase shares on your behalf based on your desired asset allocation.
Using a stock trading app
For convenience, many investors are turning to stock trading apps like Robinhood, Webull, and SoFi Invest. These let you easily open an account right on your phone and fund it with a bank transfer. You can then buy and sell stocks and ETFs commission-free. Trading apps make it very easy to invest in individual stocks like Facebook.
Factors to consider before buying Facebook stock
Here are some things to keep in mind before purchasing Facebook shares:
- Volatility – Facebook stock has seen ups and downs. Be prepared for price swings.
- Competition – Facebook faces rising competition from other social media platforms like TikTok.
- Regulation – Increased regulation and antitrust scrutiny could impact Facebook’s business model.
- Valuation – With a P/E over 20, Facebook may be priced at a premium compared to peers.
- Economy – A weakening economy can lead to declines in advertising spend which impacts Facebook’s revenue.
Dollar cost averaging into Facebook
Rather than purchasing a large number of shares at once, some investors choose to dollar cost average into the stock over several months. This involves investing a set amount, such as $500, on regular intervals to build a position over time. Dollar cost averaging helps reduce risk from buying at the wrong time.
Holding Facebook stock in a portfolio
Facebook stock can form part of a balanced, diversified portfolio. Many investors allocate technology stocks like Facebook to represent 15-25% of their overall portfolio. It’s generally advisable to limit exposure to any single stock to 5% or less of your total investment portfolio. Facebook’s large market capitalization and liquidity make it an attractive core portfolio holding for many investors.
Is now a good time to buy Facebook stock?
Facebook faces some near-term headwinds but the long-term growth story remains intact. Here are some pros and cons of buying Facebook shares at current prices around $150:
Pros
- Strong user base – 2.9 billion monthly active users provides massive reach and network effects.
- Growth in online ads – Digital ad spend continues to increase rapidly.
- Instagram and WhatsApp – Owning these popular platforms expands FB’s monetization potential.
- New initiatives – Facebook is investing in the metaverse which could create future revenue streams.
- Strong balance sheet – Facebook has nearly $50 billion in cash with minimal debt.
Cons
- Stock appears moderately expensive – Forward P/E is around 20x.
- Regulatory concerns – Potential for antitrust actions or forced breakups.
- Young demographics shifting away – Loss of teenage users to other platforms.
- Ad targeting headwinds – Apple privacy changes make targeted ads harder.
- Recession risks – A recession could cause lower ad spending which reduces FB revenue.
Facebook stock offers a compelling risk/reward proposition at current levels for long-term investors. While regulatory and macroeconomic risks remain, FB is still well-positioned to benefit from strong secular growth trends in digital advertising and social media engagement over the next 5-10 years.
Key financial metrics for Facebook
Here are some key financial figures for investors to know about Facebook (data as of October 2022):
| Metric | Value |
|---|---|
| Market Cap | $380 billion |
| P/E Ratio (TTM) | 20.8x |
| Forward P/E Ratio | 19.1x |
| Annual Revenue (TTM) | $118 billion |
| Net Income (TTM) | $34 billion |
| Profit Margin | 29% |
| Return on Equity (ROE) | 31% |
These metrics illustrate Facebook’s massive size and profitability. The company generates high margins and return on equity. Valuation appears reasonable relative to estimated earnings growth in the high-teens.
Facebook’s moat and competitive advantages
Facebook possesses several durable and structural competitive advantages:
- Network effects – Facebook’s large user base attracts more users and makes the platform more valuable.
- Switching costs – Users have all connections, history, photos invested in the platform making it hard to leave.
- Data advantage – Massive troves of user data allow highly targeted, effective ads.
- Scale – Facebook’s size achieves greater reach at lower costs than competitors.
- Brand – Facebook has one of the most recognized brands globally in technology.
These advantages form wide economic moats around Facebook’s business that are difficult for competitors to overcome.
Facebook’s growth opportunities
Facebook aims to continue growing through initiatives such as:
- Monetizing WhatsApp and Messenger more effectively.
- Expanding ad inventory and formats, like Stories ads.
- Rolling out shopping and ecommerce features.
- Growing video monetization on Watch.
- Pursuing subscription services.
- Investing billions in metaverse and VR platforms.
If Facebook can successfully execute on even some of these opportunities, it can sustain robust top-line growth for years to come.
Facebook’s risks and challenges
Trading FB stock also comes with an assortment of risks, including:
- Loss of younger users and declining engagement.
- Difficulties gaining traction in newer services like Shorts.
- Increased competition from TikTok, Snap, Twitter, etc.
- Reduced ad spending in a weak economy.
- Potential antitrust litigation and regulation.
- Security concerns, platform misinformation, and scandals.
Facebook will need to skillfully navigate these risks to continue thriving over the long-term. But the company has shown resiliency dealing with challenges in the past.
Conclusion
Facebook remains a compelling investment for long-term investors seeking exposure to digital advertising and social media trends over the next decade. While risks clearly exist, the company possesses durable competitive advantages, reasonable valuation, and promising growth levers that can drive revenues, earnings, and shareholder returns higher in the years ahead.
Investors need to be comfortable with the potential for bumpy periods stemming from regulatory concerns, platform issues, and macroeconomic cycles. Dollar cost averaging can help manage risk. But for those with long time horizons, buying and holding shares of this dominant social media leader may prove to be a rewarding investment decision. Just use a reputable online broker, fund your account, enter a purchase order for the desired number of shares, and monitor your investment going forward.
Facebook’s financial metrics, competitive position, growth opportunities, and risks all merit close inspection before making an investment decision. Consider consulting a financial advisor for guidance on how Facebook stock may fit into your broader investment strategy and asset allocation.
While past performance never guarantees future returns, Facebook has an impressive track record since its public market debut. The company has successfully adapted and grown its massive user base across regions and demographics, even in the face of competition. And it still seems to have a long runway for monetizing its various platforms globally. For investors comfortable holding stocks of dominant technology leaders for the long haul, buying Facebook shares may prove a rewarding decision.
Facebook operates the largest social network worldwide with over 2.9 billion monthly active users across its family of apps. The company boasts a strong balance sheet with minimal debt and nearly $50 billion in cash. Profit margins are robust at 30% and return on equity stands above 30%. The stock’s forward P/E ratio is around 20x, implying a moderate growth premium.
Facebook does face risks relating to regulation, security issues, slowing growth, and platform engagement. However, the company has successfully overcome challenges in the past. Facebook’s network effects, switching costs, data advantages, and scale all form competitive moats that are difficult for rivals to penetrate.
For long-term investors, buying shares of Facebook at current levels could offer an appealing risk/reward profile. The company is well-situated to benefit from strong tailwinds in digital advertising and mobile platforms over the next decade. While investing in any individual stock carries risks, Facebook appears positioned to continue generating solid returns for buy-and-hold shareholders going forward.
Overall, for investors with long time horizons seeking exposure to social media and online advertising trends, purchasing shares of Facebook at current levels around $150 can provide an attractive opportunity. As with any investment, moderating position size and diversifying are prudent. But buying and holding this leading technology stock could augment the growth and return profile of a well-balanced portfolio.