Bottom Line:
If Facebook traded at Apple and Google's valuation based on Wall Street's current estimate for Facebook's 2013 earnings ($0.60), for example, it would trade at $6-$7.
Posted on 05/21/2012 3:02:07 PM PDT by SeekAndFind
Thank goodness that's over.
The Facebook IPO could have been a major disaster for millions of individual investors.
If the stock had "popped" to a truly ludicrous level on IPO day, millions of investors would likely have piled into it, hoping for further gains.
And then, eventually, the hype would have faded, and these investors would have gotten creamed as the stock fell back to a more reasonable price.
As it was, Facebook's IPO price was not truly ludicrous--it was just extremely expensive. The "extremely expensive" part was why I called Facebook "muppet bait." And it was why I kept asking giddy IPO buyers what they were seeing that I wasn't. The answer, everyone said, was "Facebook's future potential," a.k.a., "option value."
But the trouble with buying and valuing stocks based on "option value" is that this measure is extraordinarily subjective. Depending on the market's mood, "option value" can be huge... or tiny.
Apple, for example, has enormous potential "option value"... but the market is valuing Apple at only 10X 2013 estimated earnings per share. Meanwhile, at the IPO price, the market valued Facebook at about 65X consensus 2013 estimated earnings per share.
That is extremely expensive.
And now, as many Facebook IPO buyers finally wake up to that fact, the stock is falling.
So, at what level is Facebook a "buy?" When does the company's "option value" actually offset the risk that shareholders will get clobbered if the market's mood changes?
What is Facebook actually worth?
Let's think about that...
(Excerpt) Read more at businessinsider.com ...
My prediction: $10 in 6 months.
They may have “revenue” but it is illusory.
There is no profit model and the institutional investors, most of which are on the sidelines, will short it accordingly.
Apple has real products. Google has real adevrtising potential.
Facebook is air. Nothing real. Sure - 900,000,000 users. All 'free' users. You can't make money on free.
I don’t think it will go that low that fast. But what I would be concerned with is ... with 900 Million (or whatever) members, what is the growth potential?
One of my favorite political and social commentators, David Goldman, aka “spengler” - has written about this Facebook IPO, which sums up everything nicely
http://atimes.com/atimes/Global_Economy/NE22Dj03.html
Well, to me, personally, not a damned penny.
Biggest waste of time and bandwidth on the internet.
It beats me as to why grown persons would post every single aspect and incident of their pitiful lives for the whole world to see and laugh over.
Stupid.
But, that's just my humble opinion.Your opinion may differ.
The article values the company at $6-$7, under normal circumstances.
Earlier today I said $6.
I do not see the enormous growth potential that others do....so I would value it like a ‘normal’ company.
A value of 65 x earnings essentially means you max annual return is expected to be 1.5%. I can do better (and safer) with a money market at my local bank. Or, I could buy a variety of mutual funds and do better. Heck, I could buy Google stock and do better.
Its makes absolutely no sense, unless you believe Facebook will magically start making more money - alot more money.
Just curious, what was FB going to do with all the money they thought they were going to raise?
Also remembering back to the dot com frenzy of 1990's IPOs, they hit the market at whatever price; say $20 and are gobbled up in big lots by institutional buyers where they stock bundles are attached to mutual funds or spun to favored clients. They sell huge volumes at slight margins, say $22 - $24 and then get out. In a short time the stock settles at about half of where it was publicized. It was consistently this way when I followed IPOs with interested associates in the past.
I expect Facebook to level around $18 by mid June.
Did you mean what IS FB going to do with all the money they raised?
For FB the IPO was a tremendous success.
Hookers and blow in Vegas.
BARRY SOETORO/ BARACK OBAMA's FOREIGN STUDENT CARD Posted on Facebook....
http://maoliworld.ning.com/forum/topics/barry-soetoro-barack-obama-s-foreign-student-card-posted-on
Idiots all. Fakebook has no real value.
The article does a good job of articulating what I have believed for a long time:
Google really KNOWS us...our search history reveals all our dirty secrets. We forget we are being watched, and let it all hang out....and Google will send targeted ads, matching our proclivities.
Facebook, however, only knows the ‘dating website’ plastic banana version of us. We only reveal what we want to...and the targeted advertising hits precisely in the wrong place.
I expect they should be able to quadruple that number in ten years if the fad holds up.
I am thinking this is a great SHORT buy
I think the real problems will start for Facebook when advertisers figure out Google gives them much more bang for their buck.
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