Facebook has acted to make shares available to individual investors in its initial public offering (IPO) next Friday. But Henry Blodget, CEO of Business Insider news service, says stay away.
He tells CNBC that he would “absolutely not, certainly as an individual,” invest in the IPO.
“This is muppet bait,” Blodget says. “Everyone knows about it, they’re so excited. It’s waited to go public. There’s all this anticipation.”
Blodget made a name for himself during the late 1990s as a Wall Street analyst who was very bullish on Internet stocks.
As for Facebook, last Thursday it added discount broker E*Trade to its roster of underwriters.
"The only reason Facebook would ever authorize E*Trade as an underwriter is because it wants broad retail distribution of its IPO," Scott Sweet, senior managing partner at IPO Boutique, an IPO research firm, tells CNNMoney.com.
Blodget may be pleased to know that a plurality (31 percent) of more than 4,000 individual investors polled by The Motley Fool don’t plan to buy Facebook shares. That compares to 26 percent who do plan to invest and 47 percent who aren’t sure.
Those who aren’t buying say Facebook is overhyped and overvalued, that its business model is unsustainable and too opaque, and that they like to avoid IPOs.
Those who do want to buy say the company dominates the social media space and will be able to maintain its leadership position. They also think Wall Street undervalues social media.
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