Are you curious about how to buy Facebook stock? Facebook is one of the most popular social networking sites in the world and their stock has been on a steady rise recently. If you want to buy Facebook shares, there are many different ways to do so, each with its own benefits and costs associated. In this blog post we will discuss how to buy Facebook stock, as well as what you should consider before making your purchase decision.
If you’re interested in buying Facebook shares, it can be done entirely online. While you may already be thinking of investing in Facebook stock, this article does not advise you to invest in Facebook stock. We will share how you can buy stock in companies, with Facebook as an example. Investing in Facebook is an investment decision for which you might want to consult your investment advisor. This is not investment advice by any means.
Overview of Facebook
Facebook is the world’s largest social media platform. It is also one of the most valuable companies in America with 1.88 billion daily active users and 2.85 billion monthly active users. Facebook is a public company and trades on the US major stock exchanges. Facebook is headquartered in Menlo Park, California with other offices around the world.
Facebook has several products including Facebook, which is its social network, Instagram which is a photo- and video-sharing app, Messenger for messaging through chatbots or Facebook messages. Other products include Facebook Reality Labs, an augmented and virtual reality product that helps people feel connected, no matter where they are and Facebook Marketplace an e-commerce website that enables people to buy and sell things in their local communities.
Facebook is listed on the NASDAQ stock exchange under the ticker symbol FB with a market cap of $965.05 billion. The stock is a buy for investors looking to diversify their portfolio and generate high returns with low risk because of Facebook’s strong fundamentals such as “global scale” and its innovative offerings like Instagram and Messenger that are attracting more and more users.
If you’re thinking of investing in Facebook, you should look at the stock’s recent performance and its potential for future growth. You should also look at future product announcements and other impacts on the markets Facebook operates in to analyze if any announcement could impact Facebook’s stock adversely.
Facebook’s stock performance in recent years
Facebook stock has been a top performer in the last five years. Facebook’s stock has been one of the world’s top performers in the past five years. In June 2016, FB stock was trading at $114, and the current price as of June 2021 is $329. Although there was a dip in Facebook’s stock price because of the pandemic, the stock has rebounded quickly in a few months.
Buying, selling, and trading Facebook shares
Here are the differences between buying, selling, and trading Facebook shares.
Buying Facebook shares: Buying Facebook shares involves finding a broker and placing an order to buy Facebook shares. You would want to buy at a lower price to profit if the stock price goes up.
Selling Facebook shares: If you already hold Facebook stock, you can sell it for a profit if you’d like to. If Facebook’s stock price has increased significantly since you purchased it and if the market conditions look favorable for selling, that is, if you expect the price to drop, you can sell the shares and make a profit. Selling involves finding a broker and placing an order to sell Facebook shares.
Trading Facebook shares: Trading Facebook stock is the same as buying and selling Facebook shares, but it is done over shorter periods. With trading, the goal is to make smaller profits quickly. You also run the risk of making losses rapidly as well. If you’re a new investor, we recommend buying and holding your investments in Facebook for a longer period, i.e., six months to a year or more.
Steps to follow before buying Facebook shares
1. Understand how the stock market works
If you want to invest in Facebook stock, you should understand how the stock market works. You should not panic when stocks go down or buy in a frenzy when stocks trade high.
2. Research Facebook stock
As an investor, it is a good idea to buy stocks in companies that you’re already familiar with and know well. If you are already using a Facebook’s products and trust the Facebook brand, you can buy the shares of Facebook. Before you buy Facebook shares, you should take steps to research the stock and its fundamentals.
You should look at where Facebook gets its revenue from, how its growth looks like, and what its plans are. Most of this information will be available in Facebook’s annual report in the annual letter to shareholders. This letter will share the important updates in the business. The SEC filings of Facebook, conference call transcripts of Facebook, quarterly earnings updates of Facebook, and recent news related to Facebook are good sources of information to analyze the company.
The more analysis you do and the more information you have, you will make more intelligent decisions about investing in Facebook.
3. Examine broader market conditions
You should also look at broader market conditions before you buy Facebook shares. If it is a bull market, the price will go up, and it would make sense to buy Facebook stock immediately. If it is a bear market, the price will go down, and it might be better to wait to buy Facebook stock at a lower price.
How to buy Facebook shares – a step by step guide
Buying Facebook shares is a simple process, even for new investors. If you’re thinking of buying Facebook stock, you must decide whether you want to buy Facebook stock for the short term or the long term. If you’re going to invest in Facebook shares for the short term, you should perform a technical analysis of Facebook stock.
If you want to hold Facebook stock for the longer term, you should perform a fundamental analysis of Facebook. You should also keep yourself updated with news and with developments of Facebook. Here are the steps you need to follow.
1. Select a broker
To buy Facebook shares online, you will need to use an online brokerage platform. You will need to choose a broker that gives you access to NASDAQ, as Facebook is listed here. In general, you should look at the following parameters before selecting a stockbroker.
- Stocks available for trading: The first criteria for selecting the broker is that you should be able to use the broker to trade the stocks you’re interested in.
- Commissions charged: Some brokers charge a higher commission, so if you want to maximize your profits, you would want to choose a broker with lower commissions.
- Account fees: You should also watch out for other fees such as annual fees, inactivity fees, trading platform subscription fees, and fees for research or data. Brokers will also charge a fee for transferring cash or investments or for closing your account. You can avoid many of the fees by choosing a broker that doesn’t charge fees or by opting out of services that cost extra.
- Payment methods: Some brokers are more flexible in their payment methods than others. If you want flexibility in payments, this should be one of your criteria.
- Track record: You should choose a broker based on their track record. The broker that you choose should have a track record of reliability, and they should have been around for a while and have good reviews online.
Our broker reviews can help you select from the best brokers for stock trading. Here are the best stock brokers of 2021.
2. Open a brokerage account
This is the account in which your Facebook shares will be stored. Opening a brokerage account has become very simple. The steps vary from platform to platform, but you should be good to create your account once you provide your details and some form of identification. Again, the time taken to open an account varies between platforms.
3. Fund your brokerage account
The next step is to log in to your account and deposit money in your brokerage account. Most brokers accept bank and debit card transfers, and some accept transfers through other methods such as Paypal.
4. Decide how many Facebook shares you want to buy
If you’re a new investor, you could start small with a small amount and gradually increase your investment as you get more experienced in the stock market. You can also think about investing in fractional shares, which certain brokers offer. Buying a fractional share means you are purchasing a portion of Facebook stock instead of whole Facebook shares. If the Facebook share is too pricey, you can opt to buy a fractional share of Facebook.
5. Choose your stock order type
All you have to do now is search for the FB ticker, specify the number of Facebook shares, choose your order type and click on buy. Once you place your order, your broker will execute the order, and the Facebook shares will be listed in your account.
There are different order types you can place. Let’s look at the most commonly used ones, the market order and the limit order.
The market order instructs your broker to place an order to purchase Facebook stock at the prevailing market price. There are no price parameter restrictions on this order. You should use this order type for stocks that don’t experience wide price swings, generally larger company stocks. Stock prices can vary between seconds.
If a slight price fluctuation does not matter to you, you should place a market order. If you place a market order trade “after hours,” when the markets have closed for the day, your trade will get executed the next day at the prevailing market price.
The limit order instructs your broker to place an order when the Facebook stock reaches a specific price point. It gives you control over the price at which your trade is executed. For example, if a stock is trading at $200, but you value Facebook at $180, the limit order tells your broker to wait till Facebook stock reaches $180. Limit orders are suitable for smaller company stocks that experience wide price swings.
6. Review your position periodically
Once you have purchased Facebook shares, you should monitor the stock according to your investment strategy. You should follow the company’s quarterly and annual results and the news and developments in the company.
Investing always comes with certain risks and Facebook is no different. You can reduce risks by diversifying your portfolio and by avoiding scams by choosing a reliable broker. To recap, you can buy Facebook shares by selecting a broker, opening a brokerage account, depositing money in your brokerage account, placing an order, and reviewing your position periodically.