4 Reasons Why Facebook Should Not Be Underestimated

It feels as if the Street is looking to poke holes in Facebook in the hours before its IPO.

Although he understands the need to understand all sides of the story, Bill Gurley, general partner at Benchmark Capital, tells us that focusing on the potential negatives is probably the wrong way to look at Facebook .

In full disclosure he’s a stake holder in Facebook, but as someone involved with the company already, he says there are key things that everyone should know and perhaps few people do.

They are:

1) It’s the most trafficked site in the world on the Internet. "That’s a big deal," he says.

2) Engagement metrics are incredible. Pros look at ratio called DAU/MAU (daily active users versus monthly active users) and that data point is off the chart for Facebook. "Something like 50% of users check in every day. That’s an engagement metric that no other company has."

3) There’s a strong formed network. "Because of the friending feature – Facebook has a global network that crosses all kinds of borders. It may be stronger than any other companies ever seen."

4) There is no competition for this company. Gurley doesn't think Google Plus or any of the other rival services present a real threat to challenging Facebook's dominance.

“When you consider those points it would be a mistake to underestimate this company,” says Gurley.

However, it's also worth nothing that Gurley suggests the first days of trading are probably for the pros, only. "I don't think retail investors should be buying any IPO's."

After that, however, you might want to take a look.


NEW SLIDESHOW: The Facebook IPO: A Fast Money Primer


Posted by CNBC's Lee Brodie

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Trader disclosure: On May 17, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is long JPM; Stephen Weiss is long AIG; Stephen Weiss is long QCOM; Stephen Weiss is short JCP; Stephen Weiss is short CMI; Stephen Weiss is short AEI; Stephen Weiss is short CHK; Stephen Weiss is short FXA; Stephen Weiss is short JEC; Stephen Weiss is short X; Stephen Weiss is short MT; Brian Kelly is long Nat Gas; Brian Kelly is long FDX; Brian Kelly is long UPS; Brian Kelly is long WFC; Brian Kelly is long USG; Brian Kelly is short EUROSTOXX 50; Brian Kelly is short CAC 40; Brian Kelly is short FTSE 100

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