Grab a piece of Facebook if you can

The social network's furious growth and second-nature status among a coveted demographic make its IPO worth buying.

By Jim Cramer Apr 24, 2012 8:56AM

You don't go up to a group of college kids and ask, "How many of you use Facebook?" You don't, because that's like asking, "How many of you brush your teeth in the morning?"

 

That was my experience in returning to my alma mater, Harvard, this weekend, and I don't believe Facebook's penetration at the campus where it was born is any greater than it is anywhere else. Facebook has insinuated itself into every particle of peoples' existence in a very fast way, but particularly in the people who are trying to figure out their preferences.

 

That, alone, makes the initial public offering worth participating in.

 

Now, I am going to make some assumptions that purists won't want to hear. I am going to make some judgments that will be considered lightweight, if not cavalier.

 

But I do not care that Facebook's profit declined vs. the previous quarter's. The fact is that the revenue has already touched $1 billion for the quarter, and the company is profitable.

 

I do not care that the company is paying for patents and that it has lots of expenses I can't get my arms around.

 

Facebook got to $1 billion so fast that I have to believe there is much more behind it.

 

I do not care that the deal seems a little more opaque than usual. That's even despite the fine print of the Instagram purchase being pretty annoying, when you think about how quickly the deal was arrived at and with how little consultation there was -- none -- with the board.

 

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What I care about is Facebook's grip on the demographic the advertisers want, and it has that "demo" in a social and mobile way, so it is genuine.

 

That means if any one big advertiser goes all in -- like Procter & Gamble (PG), which looks like it is in fact doing so -- then everyone else in the category has to go all in.

 

That's what happens when you seek the coveted demo. The others must seek, too.

 

I saw nothing in what I read last night in the prospectus that makes me feel any different about that -- which means I am not dissuaded from being involved in the deal if I can get any shares.

 

OK, now that the rigorous out there have panned me, keep in mind that I have said to stay away from Yelp (YELP), from Groupon (GRPN), from Pandora (P) and from Zynga (ZNGA). Every one of those I have urged you to sell.

 

Facebook is not one I am urging you to sell. It is one I am still, as of this prospectus, urging you to buy. There is simply too much profitable growth here and too much opportunity for advertisers on Facebook to reach prospective clients before those clients have made up their minds about what brands to choose for the rest of their lives.


So do not sneer at trying to get some shares of what is quickly shaping up to be the biggest initial public offering in the history of stocks.

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust. AAP has no positions in stocks mentioned.

63Comments
Apr 24, 2012 4:32PM
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Not only would I NEVER buy facebook stock...I also deleted my profile after sitting down and adding up the waste of precious life hours I had spent typing useless crap to people I havent seen or cared about in decades...the others that matter I see in REAL life...do your soul a favor and quit this life sucking facebook, you will be much happier in the end.

Apr 24, 2012 1:15PM
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Facebook is already DONE!  Our 19 year old daughter (college freshman) has already moved onto something else.  The only people still on Facebook are the 40-50 year old parents.
Apr 24, 2012 1:19PM
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WHEN THIS MORON SAYS BUY, RUN AS FAST AS YOU CAN THE OTHER WAY!!!!!!!!!!!!!!!
Apr 24, 2012 10:19AM
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50% of Facebook users look at Facebook using a mobile app that has no ads.    No ads = less revenue.    This is why the investors are taking FB public to dump it.

Pump and dump... like always.
Apr 24, 2012 1:26PM
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Facebook may just be the most riskiest investment you could make right now. And unless you are willing to risk a whole ton of money it seems very foolish to even look into right at this time. Seems to smell a little fishy to me.
Apr 25, 2012 1:39PM
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Truthfully... people are waiting for the next new thing.  F.B. is boring.  So many people are tired of seeing pictures of kids from someone they ran around with in elementary schools, who they haven't talked to in 4 years since passing at a local H.S. football game and mistakenly said "i'm on Facebook."  This would be a huge opportunity for someone to start a hip new site that doesn't allow the congestion of F.B.  Oh wait... that girl I met once in 2007 just posted a picture of her grandmother shot-gunning a beer.  Must go.... look....
Apr 24, 2012 6:50PM
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Cramer is a lunatic, or a deceptive weasel. He basically says profitability and opacity don't matter. Huh?

If Facebook was making so much money, they would not be opaque. They would be flaunting it to drive up the IPO price. And if they were making lots of money, why let anybody else have any? Wouldn't Schmuckerberg just keep it for himself? You have to ask yourself, why does he want to sell?

As they try to monetize Facebook, it becomes more and more annoying. I don't want to know any tricks to wealth or a tiny belly. Don't they have real companies that want to advertise on FB? I've just stopped using the site altogether.

Ignoring profitability is exactly how the last dotcom bust happened. Stay away from this terrible stock.
Apr 25, 2012 2:12PM
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I never joined facebook...

Saw how much time others wasted on it...

Apr 24, 2012 1:35PM
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With one-half of the coveted demo (Generation Y-Bother) being unemployed or under-employed, it's just a matter of time before they're not so coveted any more. Quite possibly, the coveted demo's obsession with FB may be a big part of the reason why so many of them are having difficulty finding jobs after college.
Apr 24, 2012 9:54AM
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Just how exactly do you propose that we get in on the IPO for Facebook, BoBo?
Apr 24, 2012 10:46AM
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the same idiot who said wait for the GM IPO to pull back before buying and then buy as much as you can when it gets below 34........its been stuck in the mid 20's ever since and those who followed this moron are deservedly stuck with a 30% loss

 

just one more example of this low life scumbag pump and dump scam

Apr 24, 2012 1:39PM
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Sorry Jim,

 

It's not worth participating in for most of us! Facebook is going to be obsolete soon. I'm not sure who will make it so ( Privy looks like the one right now) but I am 99% sure it will happen. Just look at MySpace for historical perspective. Personally I'm not even going to get close to this stock - Too many great & "Real" companies out there to invest in.

Apr 24, 2012 6:13PM
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oh shoot I have a bunch of facebook stocks and google is about to launch a new social media site...hmmmmm.....how can I convince millions of Idiots that have a few spare bucks in their pocket to buy this????
Apr 24, 2012 4:00PM
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Just remember, this is the guy who told everyone to buy GM up to $40 when it's IPO launced at $33. It's closing today at around $23. If I'm not mistaken, GM has lots of revenue too; a lot more than Facebook

 

Maybe I'll buy Facebood when it gets to $23, from one you you who buys it at $40.

Apr 24, 2012 2:58PM
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don't forget that we have never seen cramer and suze orman together so they may be the same person..........BEWARE THE SHYSTER
Apr 25, 2012 1:31PM
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Nope, not at all. Facebook has been struggling to monetize their service, but ads that no one clicks can only carry you so far.
Apr 24, 2012 10:27AM
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Isn't he the same idiot who said grab Yahoo @ $400/share?

 

just asking.

Apr 24, 2012 12:37PM
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Remember the internet boom (bust) of the late 1990's? I rest my case
Apr 24, 2012 12:29PM
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The only money to be made will be made on day 1 when the pros get to flip it. As for the fundamentals ask your friends and family who use it 2 questions: A) Have they ever noticed a Facebook Ad?B) Have they ever bought anything from a Facebook Ad?I guarantee you 90% will say no. When advertisers realize this FB ad revenue will drop like a stone.

And should Facebook attempt to charge membership, people will dump it as there are a multitude of other ways to get connected. And the software to make a facebook is really easy making for easy competition.  Personally, I think its a fad.  It will last probably 10 years then fade.  MySpace made it about 6 years.

Apr 25, 2012 3:03PM
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Please...FB is over.  A lot of the kids (the main demographic) already know it and they're waiting/looking for the next thing.  Adults are learning that being on FB is a chore---the pressure to respond, "stay in touch", etc---it becomes a grind.

The value of FB will be the measured in the shelf life of the information it has been able to mine with its shockingly invasive policies, that so many have been duped into willingly providing.

The author is shilling.

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