I do have a Facebook page. I do not own shares of Facebook.
Sometimes “great deals” do not work out. Here is why…
Apple currently trades around 13 times earnings
Google currently trades around 18 times earnings
At $38/share, Facebook is valued around 100 times EARNINGS.
Do not get hung up on the PRICE of Facebook stock.
Rather, focus on the VALUE of Facebook, as a company.
There are NO exchange-traded funds or mutual funds which own Facebook at this time.
When Google went public in 2004, it was priced around $85. The shares opened that day around $100, and closed that day around $100. No one really knew what to expect. Google seemed really expensive. A year later the stock was $280. That’s a good investment.
On the negative side:
It appears difficult to really promote Facebook as a “growth stock” because it is priced at full value, already has 900 million people using Facebook, they stated in their road show that they may have “issues” monetizing mobile subscribers, in short the stock is “priced to perfection.” This implies if anything goes wrong, the stock may have some trouble.
On the positive side:
As a data mining company, no other organization (to my knowledge) has been able to wrangle so much data from individuals. From a marketing perspective, that is an extremely powerful asset. Additionally, if they can figure out a revenue based business model based on advertising, it has tremendous potential.
There are very few people who can predict what Facebook will be worth in the future.
Or will it become a marketing and ad-selling juggernaut?
Source: Mullooly Asset Management
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