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This is simple to explain, Facebook isn't anywhere close to its revenue potential, many people think it has the capacity to make Google type money as brand adve
by jamiequint 16y ago
This is simple to explain, Facebook isn't anywhere close to its revenue potential, many people think it has the capacity to make Google type money as brand advertising moves online. If you look at their stock price in that light its not overvalued at all. Google's 2004 P/E was around 100, even in 2008 it was 46.
EDIT: oops, I pulled revenue not earnings. Its irrelevant in any case. By the time Facebook IPOs their earnings should be on par with Google's IPO earnings.
- mikeryan 16y agoYou're conflating revenues and earnings. Their valuation is at 33x revenues. Their P/E right now is likely somewhere in the hundreds.
- jamiequint 16y agoYou're right, mixed that up. However, I'd be willing to bet that by the time Facebook IPOs their P/E will be lower or equal to Google's P/E at the time of IPO.
- jamiequint 16y agoHow about an explanation instead of just downvotes. This is a totally reasonable statement given FB revenues (yes I know this is not equal to earnings) compared to Google's in 2003.
- michaelchisari 16y agoThe most information we've gotten about profits is that it's in the "tens of millions". Now, to make the math easy, let's say they have profits of $33 million. That puts their P/E ratio at 1,000.