5 ms·

I really don't get why FB is valued that much. If you look at their revenues, net income, quarter-to-quarter growth, the stock should be at $5.50. Seriously, l

by rorrr 14y ago

I really don't get why FB is valued that much. If you look at their revenues, net income, quarter-to-quarter growth, the stock should be at $5.50. Seriously, look at GOOG, compare it to FB. You must be insane to buy FB.

wanderful 14y ago
The question for many investors isn't in the current figures so much as what are the future figures likely to be and how that compares to the current figures.
- rorrr 14y ago
  True, but if the company is not really growing, how can you expect the future figures to go up? FB is really stuck, they have no fucking idea what to do with all the users. FB ads don't work. The only way FB will survive is if they start selling shit directly on their pages, highly targeted, Amazon-level goods and prices.
dsil 14y ago
Buying stock is generally about what you think will happen in the future, not what has happened in the past.
- swasheck 14y ago
  But isn't the future based, at least in part, on what's happened in the past?
- rmATinnovafy 14y ago
  No, sir. Speculating is about what you think will happen. Buying stocks in a business is about buying into something that has shown to be profitable, and stable. Enough to exchange your hard-earned money for it. Read "The Intelligent Investor" by Benjamin Graham to gain a better picture of what investing really is.
  - zeroonetwothree 14y ago
    This is basically the age-old debate between "growth" vs. "value" investing. Either side has some arguments; personally I prefer to stay out of it.
  - crazygringo 14y ago
    Speculating is not about what you think will happen. It's about what you think other people think will happen. It's about the market, not the inherent value of the stock. Good investing is about buying into something you think is undervalued. If a business has been "shown" to be profitable and stable, as you say, then its stock price will be high enough to reflect that, and it's probably not undervalued, unless you know something special about it. All you can expect it to receive a steady small stream of dividends, or sell the stock sometime in the future for roughly the same amount you paid for it originally. That's not really "investing", that's just swapping cash for stocks. Save yourself some risk and just put your money in an index fund instead.
  - deleted 14y ago
    [deleted]
  - adventureful 14y ago
    I agree about the value of Ben Graham, however, there's no set definition for what investing is really all about. If you want to argue what the most rational approach to investing is, sure, that's fine. However, there are a lot of ways to skin the cat these days. You can high frequency trade; you can slap puts on stocks if you have a skill as a short; you can use calculated hedges and skim points; you can carry trades through currency variations; you can buy and flip based on market panic (or short temporarily based on irrational euphoria), with no intention for long term holdings or long term profit concerns. I think more people (less skilled professionals) can invest in the Ben Graham model, over a long period of time, than any of the other approaches. But, a select few have turned out to be extraordinary at the other approaches, and have made great fortunes that way as well.
  - TomatoTomato 14y ago
    One of the most common and simplistic valuation methods is using the Expected Value of the Net Present Value of Future Earnings. Past information can be an indicator, but is in a sense "Sunk."
- alttab 14y ago
  Unless you are talking about the ability of existing management to make positive changes in the future.
- rorrr 14y ago
  That's a meaningless statement. What you "think will happen in the future" is based on what you know about the company. And what we know now, doesn't look so good.
loumf 14y ago
If it stays there, then $38 is the market view of the present value of future business models it thinks FB will be able to create. It's not just what they do now, it's "the unknown" things people think they will be able to do (which is just speculation). GOOG investors are speculating that there's less potential for that.
redthrowaway 14y ago
For a long time, Google had similar monetization challenges. It was only after Adsense that they really started making money. I imagine FB's pricing reflects the expectation that they'll find a way to make serious cash, although I'm not overly optimistic on that front.
- rorrr 14y ago
  Yeah, but FB is not making good money even after they started posting ads.
  - deleted 14y ago
    [deleted]

by rorrr 14y ago

wanderful 14y ago

The question for many investors isn't in the current figures so much as what are the future figures likely to be and how that compares to the current figures.

rorrr 14y ago
True, but if the company is not really growing, how can you expect the future figures to go up? FB is really stuck, they have no fucking idea what to do with all the users. FB ads don't work. The only way FB will survive is if they start selling shit directly on their pages, highly targeted, Amazon-level goods and prices.

dsil 14y ago

Buying stock is generally about what you think will happen in the future, not what has happened in the past.

swasheck 14y ago
But isn't the future based, at least in part, on what's happened in the past?
rmATinnovafy 14y ago
No, sir. Speculating is about what you think will happen. Buying stocks in a business is about buying into something that has shown to be profitable, and stable. Enough to exchange your hard-earned money for it. Read "The Intelligent Investor" by Benjamin Graham to gain a better picture of what investing really is.
- zeroonetwothree 14y ago
  This is basically the age-old debate between "growth" vs. "value" investing. Either side has some arguments; personally I prefer to stay out of it.
- crazygringo 14y ago
  Speculating is not about what you think will happen. It's about what you think other people think will happen. It's about the market, not the inherent value of the stock. Good investing is about buying into something you think is undervalued. If a business has been "shown" to be profitable and stable, as you say, then its stock price will be high enough to reflect that, and it's probably not undervalued, unless you know something special about it. All you can expect it to receive a steady small stream of dividends, or sell the stock sometime in the future for roughly the same amount you paid for it originally. That's not really "investing", that's just swapping cash for stocks. Save yourself some risk and just put your money in an index fund instead.
- deleted 14y ago
  [deleted]
- adventureful 14y ago
  I agree about the value of Ben Graham, however, there's no set definition for what investing is really all about. If you want to argue what the most rational approach to investing is, sure, that's fine. However, there are a lot of ways to skin the cat these days. You can high frequency trade; you can slap puts on stocks if you have a skill as a short; you can use calculated hedges and skim points; you can carry trades through currency variations; you can buy and flip based on market panic (or short temporarily based on irrational euphoria), with no intention for long term holdings or long term profit concerns. I think more people (less skilled professionals) can invest in the Ben Graham model, over a long period of time, than any of the other approaches. But, a select few have turned out to be extraordinary at the other approaches, and have made great fortunes that way as well.
- TomatoTomato 14y ago
  One of the most common and simplistic valuation methods is using the Expected Value of the Net Present Value of Future Earnings. Past information can be an indicator, but is in a sense "Sunk."
alttab 14y ago
Unless you are talking about the ability of existing management to make positive changes in the future.
rorrr 14y ago
That's a meaningless statement. What you "think will happen in the future" is based on what you know about the company. And what we know now, doesn't look so good.

loumf 14y ago

If it stays there, then $38 is the market view of the present value of future business models it thinks FB will be able to create. It's not just what they do now, it's "the unknown" things people think they will be able to do (which is just speculation). GOOG investors are speculating that there's less potential for that.

redthrowaway 14y ago

For a long time, Google had similar monetization challenges. It was only after Adsense that they really started making money. I imagine FB's pricing reflects the expectation that they'll find a way to make serious cash, although I'm not overly optimistic on that front.

rorrr 14y ago
Yeah, but FB is not making good money even after they started posting ads.
- deleted 14y ago
  [deleted]