Facebook always seems to be in your news feed, doesn’t it? Especially if, like the one billion other users on this planet, your news feed starts and ends by checking your profile on the social media giant’s website.
But even when you’re not on the site, you’re apt to run across somebody who’s talking about some aspect of Facebook, whether it’s a privacy concern spreading through a popular app, or it’s a cute picture of a baby kitten that makes the local television news.
Facebook is always in the news and a hot topic of office conversation, it seems. And that’s exactly why people are putting their money where their mouths are, and investing in (or betting against) the stock and options of Facebook.
In a little more detail, below are three reasons we think that’s happening.
1. Folks know Facebook … or they think they do
In the grand scheme of things, it doesn’t matter if people really understand how a financial product works. The biggest motivator that draws people to trade stocks and options is that they believe they understand the underlying company, or its industry — or its customers and competitors.
And that makes complete sense, given how much news we ingest about Facebook on a daily basis.
If you’re online in the developed world (and increasingly, even in less developed locales), you’re getting news about Facebook, whether you like it or not! And as a result, it’s difficult to avoid the formation of opinions about whether the company will be successful in the short term.
Once you’ve formed an opinion, it can motivate you to trade stocks or options relating to that company.
2. Big markets are scarier
As millions of Baby Boomers leave the workforce, and take their investments out of index funds and broad-stroking market-wide investments, younger investors have a legitimate fear that the broader stock market and its index funds will lose value and possibly even collapse. As a result, investors are starting to learn the workings of a handful of companies they feel they understand well.
And everyone thinks he understands how Facebook works!
3. There’s lots of resources out there
Due to Facebook’s popularity as an app and social network, it’s not surprising that people love to talk about making offensive or defensive investments in Facebook’s options and shares. They’re eager to teach others and gain supporters for their position too, so you’ll find all kinds of investment advice (good and bad) out there, when it comes to Facebook. That’s what keeps the process interesting!