Facebook, which operates the social media platform that everyone knows (nearly 900 million users), is finally going public in a much anticipated IPO in a matter of days.  Once they “go public” anyone with a brokerage account will be able buy shares of the company.  And since this is probably the most hyped IPO since Google, it begs the question… should you buy it?

BTW…a shameless plug for my own Facebook page…Wes Moss Money Matters…I like your Likes…;)

A close reading of the S-1 (a pre-IPO financial disclosure) gave us our first chance to make an informed decision about investing in Facebook. For the first time, we saw how much revenue Facebook generates, their operating costs, profit margins, growth expectations, et cetera.

And after pilfering their financial data, I think there’s reason to be cautious about the prospect of going into business with Facebook whiz-kid founder Mark Zuckerberg… but it’s nothing personal. Before Facebook launches its Initial Public Offering (IPO) and starts trading publicly, shares of the company will be offered to the largest, wealthiest (and sometimes, most famous) clients of the investment banking firms handling the IPO, including Morgan Stanley, J.P. Morgan and Goldman Sachs. Smaller, less wealthy investors will be left to buy shares “aftermarket” once the initial investors sell their shares at heavy premiums.

That being said, the numbers surrounding this offering are jaw dropping.  Going public could give Facebook a market value up to $100 billion, and raise a more than $10 billion war chest for the company.  That would dwarf the $1.9 billion that Google raised with its 2004 IPO.  Zuckerberg, who started the company in his Harvard dorm room in 2004, could be worth nearly $20 billion in the wake of the IPO.

Facebook will use the cash infusion to build on what has already been incredible growth.  The company will undoubtedly hire more programmers, network engineers, software engineers, security experts, marketing experts, graphic interface designers, project managers and advertising sales reps in an effort to further dominate its current market, and perhaps explore others.

It’s all very promising. 

However, I still suggest you remain cautious about jumping into this one.  The Facebook IPO has been hyped like no other in recent memory.  You may want to give the stock a few months to find a level that is reflective of both the company’s future promise AND the challenges it faces.  Social media experts wonder if we’re in a Facebook “user bubble” that could burst as people get bored and move onto to other platforms. Remember MySpace?  And Zuckerberg himself worries about protecting Facebook’s culture in the wake of the IPO, which will turn many of the company’s key players into multi-millionaires. According to Bloomberg LP, of the 10 U.S. consumer Internet companies that held IPOs in the past year, nine rose in their first day of trading, and only three are still higher than their day-one closing price. Groupon Inc. and Pandora Media Inc. have lost more than half their value since their IPO.

If you’re really craving some action on Facebook stock, consider trying to own it in a more diversified way. Since it will be trading on the Nasdaq, take a look at QQQ – the ETF that owns the 100 largest non-financial stocks on the Nasdaq. If it’s really a winner, a rising tide may lift all the ships in the harbor.