Skip to comments.Morgan Stanley says internet companies overvalued, lowers view
Posted on 11/11/2013 3:50:01 PM PST by xzins
Morgan Stanley lowered its industry view on internet stocks to "in-line" from "attractive," saying growth in the sector needs to accelerate to justify current valuations.
Shares of Facebook Inc and LinkedIn Corp have more than doubled in the last one year, and trade 44 and 97 times forward earnings, according to Thomson Reuters data. Google Inc's shares have risen 56 percent in the same period and trade almost 20 times earnings, data showed.
Morgan Stanley analysts said the rise in the valuation of internet stocks has been due to investors looking at the total addressable market (TAM) opportunity with minimal focus on risks.
Morgan Stanley removed Google from its Best Idea List, saying that catalysts have played out.
The brokerage, however, maintained its "overweight" rating on Google and other internet stocks including eBay Inc, Amazon.com, LinkedIn and Facebook.
Copyright Thomson Reuters, 2013.
(Excerpt) Read more at globalpost.com ...
It’s a safe bet since the entire market is over-valued, inflated, bubbled due to Fed QE buys.
If these are more so than others, I wouldn’t argue. When this bubble breaks, we’ll all be back to 2009 or worse.
The only one I question would be Amazon/Ebay which actually are selling products and getting income
I agree about Amazon, with my only caveat being that they actually sell things, so their crash will not be all the way to the basement. They at least have an inherent value.
Twitter just went public...after the dust settled, the company was valued at $32 Billion dollars.
No profit. Nothing particularly proprietary. Not much book value (even if they own servers, they constantly become obsolete).
$31 billion built out of nothing.
Facebook was $115 billion. It amazes me.
Something else could literally come up overnight and put Facebook and Twitter out of business....Remember “MySpace”?
I’ve been to little country auctions time and again where an item will get run up for no apparent reason. Is there any way they could sell it again for 300 bucks? Nope. But they’re determined to have it, so they just keep bidding, and the auctioneer and his assistants will just keep prodding them to go higher.
That’s what’s happening in my mind, with twitter and facebook and the like. Because X bid $1000, then Y believes $1200 is realistic. And no one asks why.
Absolutely I remember Myspace...talk about a flameout.
The most important thing I’ve noticed about Facebook, is where they make investments and devote time to innovation. Facebook doesn’t waste much time making the experience better for their customers (well users). Instead they devote their time to making the experience better for their REAL customers (companies that place ads and buy data). Before the IPO, they were buying up all kinds of nifty technology to data mine the users better.
How long until the users say no more, and leave?
Facebook turned a profit last quarter, because user numbers have gone up. Of course, this is because they have introduced an APP to third world users...I wonder what type of consumers they are, and whether or not their ad rates are justified.
He wasn't completely pessimistic about Twitter, though. He said at least they have a business model built on revenue from targeted passive advertising.
I went to an auction once, and they auctioned off a flat of mason jars. The exact same flat could be purchased at the grocery store two miles away. In fact, I am confident that this very flat had been purchased at this grocery store at some point in the past.
But up went the bidding, to about triple the price. There was nothing rare or collectible about these mason jars...they were just ordinary jars. And I have to assume that anybody who wants mason jars actually uses them...meaning that they already know what a fair price for jars is. Didn’t stop them from bidding it up, though.
I was fascinated.
Don’t get me started on the baskets....baskets?!?!? The wife’s baskets were worth more than hubby’s guns.
I agree. I'm amazed at basket prices. At least baskets do have some kind of utility, but when you can buy a similar basket (without name brand) at Target or WalMart for a few bucks, then you know where the customers will go if baskets ever again become truly essential.
Guns, on the other hand, aren't easily manufactured, really do require precision milling, and are critical for security and useful for sustenance.
My dad's old 22 rifle, still in very good shape, that he bought when I was a kid 50 years ago, is worth in present dollars exactly what it was when he purchased it.
IMHO Morgan Stanly wants to run the show.
Either believe they are the smartest guy in the office, or they will hold their breath until the Medial looks at them.
Twitter..”.we came across the word ‘twitter’, and it was just perfect. The definition was ‘a short burst of inconsequential information,’ and ‘chirps from birds’. And that’s exactly what the product was.”(From Wiki)
That is exactly what it is: inconsequential information. When someone like Katy Perry has over 46 million “followers” that wait for her to tell them what time she goes to bed, goes to the bathroom, or how her last concert went, then we do have a service that provides nothing important.
Thousands “tweet” about a soccer score; aren’t most of those that will get the tweet watching the game? Nothing produced, just repeated by one person to thousands, then repeated to more. Jeez, what a waste of time and energy.
The only way I would own the stock would be to have it given to me with no restrictions, then sell it the next minute.
Ya mean like the 3 guys who built a healthcare web site over a weekend, for no cost ['cept a case of Red Bull and unlimited pizza] ???
And it ACTUALLY works - unlike a certain ACA web site we all know ...
FYI: See www.thehealthsherpa.com ...
The reason linkedin is seemingly so popular is there are millions using it to try to find a job in the barac Osama economy.