For those who intend to buy Facebook stock in the near future, some recent news regarding the platform is sure to be “liked:” Despite some initial revenue problems, shares of Meta Platforms, Inc. (Facebook’s parent company) have risen dramatically in just the last year, achieving 170% growth in the early part of 2023 alone and showing no signs of slowing down.
As with any investment, though, it’s important that you perform some careful research to ensure that Facebook/Meta stock is right for you. The following guide will detail how to buy Facebook stock and outline other things to consider before you do.
Can You Buy Facebook Stock?
First of all, the answer to the prevailing question, “Can you buy stock in Facebook?” is a solid yes. In actuality, though, you’ll be investing in the overarching Meta brand, which doesn’t just own and operate Facebook but also Instagram — which includes its Threads app — and WhatsApp.
In other words, Meta’s collective ownership of the three social media platforms means — even though it is certainly the one that has given Meta its current prominence — you can’t invest solely in Facebook.
Reasons to Invest in Facebook
There are many reasons why you might want to buy Facebook stocks. In particular, Meta’s recent performance owes to multiple overlapping factors, all of which spell long-term success:
Strong Momentum
Since announcing its rebrand as Meta and continuing to extend its influence through its various platforms, the company has outperformed industry expectations: From January through July of 2023, Meta stock prices rose by 123%, far above the S&P 500 market index.
Furthermore, despite some caution surrounding the still relatively new Threads app, the company continues to show strong earnings, experiencing a rise in revenue that points to its long-term potential.
Opportunities for Stable, Sustained Growth
As it stands, Meta’s greatest source of both stability and revenue is its advertising streams, but the new developments it is expanding into are themselves creating new opportunities for Meta to continue its growth.
Take, for instance, the “metaverse,” a virtual space that holds the promise of new economic and social opportunities. While its full implications are still in development, Meta promises to be a significant player in the rise of Web 3.0 technology.
In a similar vein, Meta has also stepped into the rapidly developing AI space, having released its own open-source AI language model, known as Llama, in a joint venture with Microsoft. On top of that, Meta now offers the AI-powered Advantage Plus system, which has generated even more interest from companies and retailers.
Beyond all of these ventures, “Facebook” has long since become a household name, with founder Mark Zuckerberg having taken his place alongside other tech moguls such as Bill Gates and Elon Musk. That may not fully guarantee future success, of course, but it points toward the kind of long-term stability that appeals to buy-and-hold investors.
Undervalued Stock
On the one hand, some investors may consider Meta’s current stock price to be a deterrent (more on that below), but on the other, the company is still underperforming compared to its all-time high of $384 per share.
Given the high possibility of growth in the future, now might be a good time to invest in Facebook stock. You may not be getting in on the ground floor, so to speak, but you’ll at least snag some shares before the price climbs higher.
Reasons to Be Cautious About Facebook Stock
Despite its strong advantages, there are still some reasons as to why you may want to choose to not invest in Facebook stock, such as:
High and Volatile Prices
First and foremost, Meta’s current trading price of $334 per share may be prohibitively high for some investors. The company has a high P/E ratio (29.44), which shows a strong promise of growth, but bargain investors may remain rightfully cautious.
In addition, Meta’s share prices are also quite volatile. The company beta currently sits at 1.21, and as you may know, any value over 1 indicates that the stock is more volatile than the S&P 500 market index. In other words, you’d have more stability with an index fund than a share of Meta’s stock.
Meta Pays No Dividends
Though it may be a relatively minor point for some investors, it’s worth noting that Meta stock pays no dividends. Many companies that perform favorably distribute their excess earnings back to their investors, giving them a form of passive income commensurate with the number of shares they own, but Meta has no such program, nor are there any hints that investors will see any stock dividends in the future.
How to Buy Facebook Stocks
Should you decide to invest in Facebook stock, you can do so through the following steps and strategies:
Choose a Broker
Purchasing any stock requires that you select the right broker. Your choice may take the form of an in-person brokerage firm or one of the online brokers that have risen in popularity, but in any case, Meta is such a popular stock that you’re unlikely to find a broker that won’t let you purchase shares.
Regardless of the option you choose, it’s important to compare brokerage fees, commissions, and other fees that can add to the total cost of your stock purchase, especially when buying into an expensive stock like Meta.
Select Your Order Type
While you can use a market order to purchase shares of Meta stock immediately, you have other cost-saving options. A buy limit order will allow you to set the maximum price you’re willing to pay for shares of Meta.
As an example, if you were only willing to buy Meta for $250 per share, you could set up a corresponding limit order, which denotes that if the stock price ever comes down to that value, your order will be executed. If prices remain high, your order will never be completed.
Consider Dollar-Cost Averaging
Another way to buy Facebook stock is through the dollar-cost averaging technique. It is a common way to buy volatile stocks without worrying about price fluctuations impacting the sale.
Through the technique, you won’t buy your shares all at once; instead, you’ll buy one share today and then another on a different day. You’ll pay different prices with each purchase, but the general idea is that the average price will be something you can manage.
Consider Purchasing a Fund
Given the high price of each share of Meta stock, you may be better off buying a mutual fund, index fund, or exchange-traded fund (ETF). Each of these fund options allows you to pool your assets with other investors and gain ownership of a bundle of stocks, which makes them great options for new investors. Not only will a fund usually be more affordable than buying individual stocks, but you’ll also gain built-in diversification through a fund that contains stocks from multiple sectors.
Monitor Your Investment
One of the most important steps of any investment is to monitor your progress, which is all the more important when purchasing volatile stocks like Meta’s. Keeping track of stock prices can show you how your portfolio is performing, and it can also highlight a need to balance your portfolio with stocks outside the tech sector.
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