Tags: facebook | click | buy | shares

Click Here to Like (and Buy) Shares — on Facebook

Thursday, 19 Apr 2012 06:33 PM

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People are finding dates (and mates) online. Buying major appliances and shopping for cars. Doing pretty much all of their banking.

Why not buy stock directly from companies? By June, you might be buying stock via Facebook in increments as low as $10 and at zero cost, if one firm gets its way.

Loyal3, a San Francisco web company, announced at a recent conference that it would start offering shares of public companies straight from a company’s Facebook page and complete the transaction in three clicks of a mouse.

"The truth is people care more about things that they own than things they don't," Barry Schneider, chairman, president and CEO of Loyal3 told AdAge Digital. "We set out to modernize a system to make it cost effective for brands and made it as easy for consumers as buying a book on Amazon."

The idea is not new. Various so-called transfer agents have handled direct sales on behalf of blue chip firms for years, usually dividend-paying firms, through direct reinvestment plans, or DRIPs.

The big difference here is social media. Facebook has about 137.6 million unique monthly visitors and roughly 1 trillion pageviews, coming in second only to Google, according to Nielsen data from the end of 2011.

Yet 81.5 percent of Americans don’t buy stocks directly from the stock market, because of cost or difficulty, according to Loyal3 (which in turn cites the U.S. Federal Reserve). To change that, the company has developed direct-purchase model it hopes will lead to much broader ownership of U.S. stocks.

Some caveats:

1. Orders are done on a batch basis once daily. So it will (probably by design) not be attractive to day traders. Buy and sell orders are done the same way.

2. There will be a $2,500 monthly cap, Schneider tells Business Insider, to deter short-term traders.

3. Buyers can purchase once or make automatic monthly investments.

4. There could be additional limitations on purchases and redemptions from the company whose stock you buy or sell.

In the end, it’s about marketing and customer engagement, Schneider says.
Customer ownership changes everything. Companies win with more loyal and valuable customers and increased brand engagement. Consumers win with an easy and affordable way to buy stock directly from companies they know and trust,” he writes in a letter on the Loyal3 site.

“And the American economy wins with new and potentially large capital in-flows from ‘buy and hold’ Main Street investors to support and balance its markets.”

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