Buy stock in your favorite companies without leaving Facebook

By on April 20, 2012, 4:00 PM

Shortly after Facebook goes public next month, the company will be launching a program that will allow other public companies to sell stock to customers right from their Facebook page. Facebook users will be able to purchase shares in as little as $10 increments void of any fees or brokers, according to former Facebook executive and current director at Loyal3 Chris Kelly.

Loyal3 highlights the fact that only 18 percent of American families own stock, a statistic that they hope will change with the introduction of their CSOP, or customer stock ownership plan. Direct purchase plans have been around for several decades but many companies don’t use them because it isn’t cost efficient to oversee millions of tiny shareholders.

By making ownership as simple as three clicks and eliminating fees and brokers, Loyal3 believes that the average Joe will be more inclined to purchase shares. CEO Barry Schneider notes that ownership changes everything as people care more about things they own than things they don’t. As the adage goes, “No one washes a rented car” because they don’t own it.

It is believed that Facebook users will be able to purchase stocks through the social network as early as June. There will be a monthly cap of $2,500 to discourage day traders, however.

The idea sounds promising but one must wonder what sort of financial impact could be had due to an influx of amateur stock traders hitting the market or worse, dumping their stocks in mass at the wrong time.

Stock image from Shutterstock.




User Comments: 8

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Guest said:

Too bad us normal Facebook users cant get a "free share" of Facebook. After all, we are the ones who use it.

Mindwraith said:

lol that would be like giving Mcdonald's stock to everyone who buys a burger with fries. or Microsoft stock to everyone who owns a PC.

Guest said:

Seriously, I am done with Zuckerberg and his ideas of world domination. 1 billion dollars for a crappy company just beacuse he is so paranoid that Google will buy them if he doesn't.

Rule number 1 for Facebook users : Get a life (in the real world).

ikesmasher said:

^implying that a vast majority of facebook users don't have a life in the real world, and that facebook to them is not just simply a free form of communication with everyone.

davislane1 davislane1 said:

"There will be a monthly cap of $2,500 to discourage day traders, however."

Poor move. There should be a $2,500 cap for the freebies and commissions on anything above. If Zuckerburg is trying to solidify Facebook in the long-term, simply giving people the ability to buy & hold stocks sans commissions is only going to increase/solidify market share so long as the profits keep up. Given the financial & investment education of your average Facebook user, I'd be willing to bet that doesn't last long.

It'll be interesting to see what this does to volatility in the stock market if it catches on, though. I can already see the bandwagoning that'll happen when someone turns a profit on a particular company, shares it, and all their friends and their friend's friends start jumping on board (or off).

kiklion said:

"There will be a monthly cap of $2,500 to discourage day traders, however."

Poor move. There should be a $2,500 cap for the freebies and commissions on anything above. If Zuckerburg is trying to solidify Facebook in the long-term, simply giving people the ability to buy & hold stocks sans commissions is only going to increase/solidify market share so long as the profits keep up. Given the financial & investment education of your average Facebook user, I'd be willing to bet that doesn't last long.

It'll be interesting to see what this does to volatility in the stock market if it catches on, though. I can already see the bandwagoning that'll happen when someone turns a profit on a particular company, shares it, and all their friends and their friend's friends start jumping on board (or off).

Furthermore, does this limit mean people can't close positions? IE a cap of $2500 moved either way per month, or is it a spending cap but you can sell stock at any time unlimited?

cookiedude cookiedude said:

Is this a global initiative or US only?

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