Billionaire investor Warren Buffett said Facebook Inc. investors frustrated with the stock’s decline since its public offering are paying the price for betting on a short-term rally.
“A very high percentage of the people that bought it initially bought it because they thought it was going to go up the next day, and that’s a terrible reason to buy a stock,” said Buffett, whose firm’s equity portfolio was valued at about $89.1 billion as of March 31. “I’ve never bought a stock in my life with that in mind.”
Facebook began trading on May 18 after selling shares in an initial public offering for $38 apiece, valuing the Menlo Park, California-based social network at $104.2 billion. The shares have fallen 19 percent from the IPO price.
“All kinds of stocks go down,” Buffett said in an interview today on Bloomberg Television’s “In the Loop with Betty Liu” program. “The question is whether Facebook is worth $100 billion.”
Buffett built Omaha, Nebraska-based Berkshire over four decades by acquiring businesses including car insurer Geico Corp. and betting on stocks like Coca-Cola Co. Buffett oversees the largest stake in the Atlanta-based soft-drink maker and began acquiring the shares in 1988.
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