How to Invest in Facebook – Investing in Facebook for Beginners 2021

Fact Checked by Gary McFarlane

Facebook has recently been in the spotlight, so many novice and veteran investors may seek to form an educated guess about whether the Facebook stock is a buy or not. The social media platform is the most popular one in the world, generating billions of dollars in revenues, so it is not surprising that many consider adding it to their portfolio.

This detailed guide will show you how to invest in Facebook, so you can start growing your funds right now. 

#1 Broker to Invest in Facebook – eToro

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How to Invest in Facebook – Step by Step Guide 2021

If you simply want to find out how to invest in Facebook and many other assets, this 4-step guide introduces you to everything you need to know without further ado. 

  • Step 1: Open an eToro AccountThe first thing you need to go to eToro’s website. Click the “Join Now” button. Enter the details required on the registration form.
  • Step 2: Verify Your Identity – Verify your identity by uploading your photographic ID and proof of address/utility bill.
  • Step 3: Fund Your Account – After KYC is complete, deposit funds via your preferred method, including PayPal, debit card, wire transfer, and online banking. The minimum deposit is only $50.
  • Step 4: Invest in Facebook Once your account is funded, type in the search bar “Facebook” and select the stock. Click on “trade” and add the amount of money you want to invest in the company.

Where to Invest in Facebook – Choose a Broker

Many online brokerage platforms have recently mushroomed as more and more retail traders (that’s you!) turn to online brokers to generate extra returns. However, each broker is suitable for different needs, trading strategies, and experience levels. To help you save time, we’ve curated this list of the top three brokers for beginners.

1. eToro – Best Overall to Invest in Facebook

eToro has disrupted the market by offering commission-free stock trading. In the competitive world of online trading, the social trading platform positions itself as one of the best trading platforms on the market. It is easy to use, while the social trading features are an excellent way for beginners to invest easily regardless of their knowledge. 

Security & Privacy

eToro’s main office is located in Israel, but the company has legally registered entities in China, Australia, the UK, the UK, and Cyprus. Apart from this, it is regulated by the FinCEN in the United States, FCA in the UK, and CySEC in the EU. Its services are available in more than 140 countries, which means that more than 20 million users benefit from services that follow the local regulatory framework. In other words, your capital will be as secure as possible, so you can trade in a thriving, safe environment. 

Fees & Features

eToro comes with plenty of features for both beginner and advanced traders. Copy trading is perhaps one of the most popular features among new users. It is available if you deposit at least $200 and allows you to copy other experienced traders’ portfolios; otherwise, you can start investing in your chosen assets with only $50. 

Furthermore, the platform provides broad access to investment vehicles. This allows you to create a diversified portfolio by investing in stocks like Facebook, along with cryptocurrency, forex, bonds, and indices. 

The cost structure is extremely competitive. When trading real stocks and not derivatives, like contracts-for-difference (CFDs), eToro does not charge any commissions. 

However, to generate revenues, the brokerage platform charges a fee known as “spread”. This is the fee included in the “buy” price you see on the platform. There is a spread of 0.09% for CFD on stocks and ETFs, while CFDs also come with an overnight fee. For forex and cryptocurrency, the spread is expressed in pips, while the stock spread is in percentage terms. 

The spread depends on the asset you trade and you can easily see how much it is – you only need to calculate the difference between the “buy” and “sell” price. CFDs are more recommended for experienced traders and short-term trading strategies in order to minimize costs. 

eToro Fees

Fee Type Fee Amount
Deposit Fee $0
Withdrawal Fee $5
Commission Fee $0
Inactivity Fee (charged monthly) $10

 

Pros

  • Regulated by local regulatory authorities, depending on your country
  • Copy-trading features for beginners
  • Easy-to-use proprietary trading platform
  • Commission-free trading available
  • Different stocks, bonds, and other assets are available

Cons

  • US clients can only trade cryptocurrency
  • No options or spread betting available

67% of retail investor accounts lose money when trading CFDs with this provider.

2. AvaTrade – Invest in Facebook Using Popular Trading Platforms

AvaTrade is an all-in-one, well-established broker that provides access to multiple assets, including forex, stocks, cryptocurrency, indices, and many more. The broker provides access to numerous trading platforms, allowing you to select the one that matches your experience and investment strategy, including the well-known MetaTrader platform. 

Security & Privacy

The broker is regulated with different authorities in six jurisdictions across five continents. One of the main security features is keeping segregated accounts for clients and business funds, just like other brokers discussed above. Regulatory compliance provides you with peace of mind knowing that the broker fully complies with existing legislation in different regions, including the EU, South Africa, Japan, and Australia. 

Fees & Features

AvaTrade boasts a wide range of features suitable for all investors and traders. The broker provides access to multiple trading platforms, including MetaTrader, and social trading platforms like DupliTrade and ZuluTrade. Also, it comes with an economic calendar, so you are always up to date with the most important events impacting the financial markets. 

You need at least $100 to open an account, and the platform also provides Islamic accounts upon request. There is no commission associated with stock trading, but there is a fixed spread starting from 0.9 pips (for forex), depending on your chosen assets. There is also a steep inactivity fee, but the broker does not charge any withdrawal or deposit fees. 

AvaTrade Fees

Fee Type Fee Amount
Deposit Fee $0
Withdrawal Fee $0
Commission Fee $0
Inactivity Fee $50 after the first three months of inactivity, and $100 after one year of inactivity.

 

Pros

  • Multiple trading platforms available, including MetaTrader
  • Copy-trading available via social trading platforms, like ZuluTrade
  • Free educational material
  • Wide range of trading tools

Cons

  • High inactivity fees

67% of retail investor accounts lose money when trading CFDs with this provider.

3. Capital.com – Best for Educational Resources

Capital.com is a strong competitor to eToro thanks to its global spread, covering about 180 countries in the world. One of the best highlights of this trading platform is the ample educational section that provides market news and guides on trading analysis.

Security & Privacy

Capital.com boasts fast order execution, 0% commission and high-security standards. It is regulated by the FCA in the UK, the CySEC in the EU, and the ASIC in Australia. In short, the broker follows the same stringent rules as eToro, making sure your capital is safe and secure. 

Fees & Features

Perhaps the best advantage of Capital.com is the breadth of its educational resources. If you want to expand your trading knowledge, the platform offers articles in various areas, so you can easily get a grasp on trading basics. The broker boasts TradingView integration, which is ideal once you develop your understanding of advanced charting tools. 

In terms of the minimum deposit allowed, Capital.com requires you to start with at least $20 if you use Apple Pay or credit/debit card, and at least $250 if you opt for a bank transfer. 

Capital.com Fees

Fee Type Fee Amount
Deposit Fee $0
Withdrawal Fee $0
Commission Fee $0
Inactivity Fee $0

 

Pros

  • Abundant educational section
  • User-friendly trading platform
  • Low minimum deposit of only $20
  • Many assets and markets are available

Cons

  • No social trading features are available
  • Not available in the US

67% of retail investor accounts lose money when trading CFDs with this provider.

Invest in Facebook – Broker Price Comparison

To help you decide which broker is best for your needs, you can check out the table below to easily compare their cost structures. All brokers provide easy access to Facebook stocks, so this will help you calculate your budget and pick the right brokerage solution for your strategy:

 

Broker Commission Deposit Fee Withdrawal Fee Inactivity Fee
eToro 0% $0 $5 $10/month after one year
Capital.com 0% $0 $0 $0
AvaTrade 0% $0 $0 $50 after 3 months/$100 after one year

What Are the Different Ways to Invest in Facebook?

Fortunately, there is more than one way of investing in Facebook stock. Some of them may be more suitable for some individuals, so it’s important to understand what options you have. When you are just starting out, terminology can be quite tricky, along with the complexity of analysis tools and the whole decision-making process. To make your job easier, we’ve picked the three main ways of investing in Facebook, breaking down their meaning, benefits, and disadvantages. 

Stocks

The most popular way of investing in Facebook is to buy shares. This implies registering with one of our recommended brokers, searching for Facebook, then adding the amount of money to invest in it. Nowadays, brokers provide fractional shares, too, so you can start your portfolio with any budget. 

When you buy shares, you become a Facebook shareholder. In other words, you own a tiny piece of the company, and you enjoy all the perks that come with it. Shareholders generate returns in two ways: they receive dividends and their funds grow via capital appreciation (when the share price increases, the value of your portfolio also increases). 

Unfortunately, not all companies pay dividends. Facebook is a tech giant which has never paid any dividends to its investors. This is because it retains all profits for reinvestment, which gives you excess returns via capital appreciation. 

In other words, you buy the shares at the current market price, and their value is expected to increase in the future. This value growth is driven by Facebook’s actions, such as mergers and acquisitions and other company-specific and economic developments. Some investors buy shares only to sell them at a later time and book their gains, while others adopt a buy-and-hold strategy, which means you will hold the shares for years or even indefinitely. 

CFDs

Another option is to buy CFDs on stocks. It stands for “contracts-for-difference”; a CFD is an agreement between you and the chosen broker. It does not make you a shareholder because you do not own the shares when you opt for a CFD; instead, you are speculating on the price movement of the underlying asset, or Facebook, in this case. Although they are just contracts based on underlying assets, you still receive dividend payments if the company pays them. 

Another benefit of CFDs is that you can easily benefit from both bear (decreasing) and bull (increasing) markets. For instance, if you expect Facebook’s stock price to increase in the future, you open a long position, then sell your CFD after the price increases. However, if you think Facebook’s price is about to decrease, you open a short position, which means that you will earn a profit if the price decreases. 

However, keep in mind that CFDs are derivatives, which means that you can easily expose yourself to massive losses if inexperienced. For instance, CFD providers like eToro allow you to increase your leverage, which means that all of your gains (and losses) can be several times higher while investing the same amount of money. Also, CFDs come with overnight fees and spreads, so they may be more suitable for short-term trading, while a longer time span is usually associated with buying and holding the real stocks. 

Exchange-Traded Funds (ETFs)

Finally, conservative investors opt for ETFs when they want to cheaply and quickly add a handful of assets to their portfolio. For instance, the Communication Services Select Sector SPDR invests only in communication services and about 21% of its assets are invested in Facebook. The ETF also contains different other stocks in this sector, which means that it decreases your exposure to Facebook, which also means lower risk. 

Best Ways to Invest in Facebook

Now that you are familiar with the three main types of investing in Facebook, let’s find out which method is suitable for your specific needs, budget, and risk appetite. 

Invest in Facebook Stocks

If you are planning for your retirement, you want to generate returns from your savings, or you simply have a long-term approach, investing in Facebook stocks may be suitable for you. This is a convenient strategy as it is quick and easy. 

This will make you a Facebook stockholder and your portfolio’s value will increase as the stock price increases. You can choose to sell your Facebook stocks at any time, add more assets, or simply create your investment portfolio and let the value grow without any interference from your side. 

Invest in a Facebook CFD

CFDs are best for people who expect to generate quick cash. Daily trades or short-term trading strategies benefit from using CFDs as you can make money by speculating on share price movements. Because of the associated overnight fees, CFDs are not usually bought for long periods. 

CFDs also allow you to open leveraged positions with maximum ease, unlike traditional stock buying. For instance, you can use only $500 to open a transaction worth $1,500. This means that your profit (or loss) will be three times higher than an unleveraged position. 

However, because of the risks of losing, it’s best to use risk management tools to protect your capital. For instance, brokers like eToro allow you to set stop-loss orders. In other words, you can limit your losses by instructing the broker to sell your CFDs automatically at your set price if the market goes against you. 

Invest in a Facebook ETF

Finally, if you have a risk-averse strategy and you seek a quick and easy way to create an investment portfolio, buying a Facebook ETF is by far the best method. This will decrease your overall risk as you will not only hold Facebook stocks, but also the different assets included in your chosen ETF. 

You can do your due diligence and opt for an industry ETF like the one mentioned above, but make sure you research how much the fund invested in Facebook stocks. An exposure lower than 1% means that lower than 1% of your returns will be moved by Facebook stock price movements. Thus, you need to pay attention to the fund composition if your main aim is to invest in this company. 

Is Facebook a Good Investment?

Facebook is one of the six American tech giants, best known as FAANGM (Facebook, Amazon, Apple, Netflix, Alphabet, and Microsoft). Unsurprisingly, Facebook is a popular choice among investors who want to invest in the booming tech sector. For instance, its stock price has climbed 22.7% YTD (year-to-date) and about 158% in the past five years. With double-digit yearly growth, it’s not surprising to find out that Facebook still has growth potential. 

Facebook’s Increasing User Base

Facebook does not detail its user base according to different platforms (i.e., WhatsApp, Facebook, Messenger, and Instagram), but it does report an increase of 15% YoY (year-on-year), reaching 2.6 billion daily active people.

Facebook does not charge its users a fee; instead, it generates revenues from advertisers. Due to the impressive user base, advertisers are likely to keep spending money to tailor their marketing campaigns. Also, Facebook collects user data shared with advertisers, so they can create targeted more effective ads. Thus, it’s not surprising that Facebook’s last earnings report showed a 31% increase in revenues. 

Capturing New Markets

Undoubtedly, Facebook’s appeal among advertisers is crucial, especially since 96.8% of its revenues come from them. Yet, the company is actively expanding its revenue sources, and a diversified revenue stream can only boost its value. For instance, the company is gradually moving into a nascent market – virtual reality. Its Oculus Quest 2 VF headset is not only one of the most affordable on the market but also widely available. 

Investing in Facebook – What Are the Risks?

Just like any other investment, Facebook stock comes with several risks. The stock market can fluctuate as a result of the business cycle, regulatory changes, and company-specific factors, among others. These are some of the main risks that come with buying Facebook stock. 

Regulatory Risks

It’s not a secret anymore that politicians and regulators do not love Facebook. All the controversy regarding Facebook’s consumer data has led to massive share price dips over the years. Yet, this may not be so meaningful to long-term investors, who are investing in the stock for a long period as they will ride out such fluctuations.  

Apple’s New Policies

Although Facebook has been at the forefront of regulatory concerns, Apple is already one step ahead. The iPhone maker has already announced its stringent privacy policy, which directly limits Facebook’s ability to target advertising on more than 1 billion Apple devices. Following this, Zuckerberg stated that Apple has made its competitive threats crystal-clear, which is translated into higher risk for Facebook’s shareholders that could potentially see the value decrease. 

How to Invest in Facebook with eToro

Getting started with your trading account is extremely straightforward with eToro. Here is a detailed step-by-step guide to help you buy Facebook stocks right now on one of the best broker platforms on the market. 

Step 1: Open an Account with eToro

First, you need to access eToro, an easy-to-understand platform with access to different beginner-friendly tools, including copy trading, stop-loss orders, and plenty of assets to choose from. Make sure you create an account using a username, password, and email address.

Step 2: Verify Your Account

Before you start trading and invest your hard-earned cash, you need to follow the prompts on the screen to upload your ID and proof of address. As eToro is a regulated platform, you need to provide your personal documents to verify your identity, which is a standard privacy measure implemented by all regulated brokers. 

Step 3: Fund Your Account

Once your account is live, you can fund your account by clicking on the “deposit” button. You can choose from a wide range of payment methods available, including bank transfers and e-wallets like PayPal. You can also use eToro’s demo account to practice trading before investing your real cash into Facebook, learn how to use eToro’s tools and features, and test your strategy. 

Step 4: Invest in Facebook

When you are ready to invest, simply use eToro’s search bar to find Facebook. Next, add how much money you’d like to invest, set up your stop-loss and take-profit levels according to your strategy, and place your order. This will be executed at market price (during Nasdaq trading hours) or at a set price if you’ve opted to buy the Facebook stock at a specific price. 

Conclusion

All in all, you can easily invest in Facebook stock right now by registering with one of our recommended brokers. All you need to do is provide your personal details and upload your ID and proof of address to comply with KYC (Know-Your-Customer) policy. Then, fund your account using your favourite payment method and open your position. 

You can buy real stocks or go long or short on Facebook shares via CFDs, depending on your risk appetite and strategy. Keep in mind, however, that trading real stocks is only available during trading hours. For instance, the Facebook stock is listed on the Nasdaq stock exchange, which is open from Monday to Friday, from 9:30 AM to 4:00 PM (ET). 

#1 Broker to Invest in Facebook – eToro

1
$50Exclusive promotion
Our score10
  • Buy over 800 stocks with 0% commission
  • Social trading network
  • Copy over 12 million traders and investors
0% Commissionstart TradingOur score 10

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About Ana Frincu PRO INVESTOR

Ana Frincu is a freelance content writer specialised in finance and economics. She has a BA in International Business Management and a MA in International Taxation and Finance. With a keen interest in fintech and personal experience as an investor, she covers a broad range of topics, including trading, alternative data, cryptocurrency, and macroeconomics.