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~10 P/E is ratio for a well established, stable business - ones that maybe deliver 10% growth. FB revenue growth is still insane - https://www.wolframalpha.com
by justapassenger 10y ago
~10 P/E is ratio for a well established, stable business - ones that maybe deliver 10% growth.
FB revenue growth is still insane - https://www.wolframalpha.com/input/?i=facebook+revenue https://www.wolframalpha.com/input/?i=facebook+revenue - once that stops, honeymoon will be over.
But FB is stabilizing - https://www.wolframalpha.com/input/?i=facebook+p%2Fe+ratio+compared+to+stock+price https://www.wolframalpha.com/input/?i=facebook+p%2Fe+ratio+c... - P/E is dropping even as stock is going up. Market is betting that in a couple of years revenue growth should stabilize.
- edblarney 10y ago"FB revenue growth is still insane" Agreed, but in order to justify the massive P/E they would have to be growing quite a lot for the next 10 years. I don't seem them delivering this kind of growth over that time. Maybe. Google was able to do it for a long while.
- justapassenger 10y agoGoogle has P/E ratio of 28. Facebook P/E ratio is right now only ~60% bigger, at 46 (and it already showed huge drop from >100 last year, as earnings are catching up with investors bets). G revenue is growing at the rate of ~20%, while FB is doing >50%. If stock price for FB growth continues, it'll reach Google P/E ratio pretty soon - not 10 years. More like a year.