Or for that matter is Zuckerberg (the Fraudian slip would be Suckerberg, but he’s carry that right to the bank!).
At $100 billion, the stock will already be trading at about 40 times 2013 estimated earnings. This compares to Apple, the hottest company in the world, trading at less than 15X earnings. Apple, meanwhile, is still growing faster than Facebook. Until growth reaccelerates, it’s hard to see how the stock will sustain a major upward move, especially at the expected trading price
The rapid growth of mobile represents a major change in usage patterns and a possible threat: Facebook is unlikely to be able to generate as much revenue per user from mobile as it does from the web, and the world really is going mobile. (Facebook actually just cited this in its latest IPO filing amendment).
The bottom line is that, as always, price matters. At $100 billion, Facebook will be valued at about half of Google’s valuation, despite having only 1/10th the revenue. That means that Facebook’s future will have to be really spectacular to give investors a great return from here.
The one the investors should not do is confuse familiarity with Facebook’s service with the stock being a good buy.
Your comments are welcome.
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