Well, the analytical question here is: what is the appropriate sample for comparison? The article uses US IPOs 1996-2010 as the initial sample. I'd like to kno

Well, the analytical question here is: what is the appropriate sample for comparison? The article uses US IPOs 1996-2010 as the initial sample. I'd like to know how sensitive this is to expanding or narrowing that range. How does that average change if you adjust the range? (The academic article may have some note of this.) Then, the article makes comparison to Google's current price-to-sales ratio as a benchmark (5.51-1). The analytic justification is nothing more than "[s]ince Facebook FB -0.64% is most often compared to Google GOOG -0.66%..." Some questions I'd ask about this: - What did Google's P/S ratio look like at IPO, and what was its growth? - What does Facebook's P/S ratio look like compared a broader sample of tech companies' P/S ratios? Or including non-tech companies? - Why not use price-to-earnings ratio? (I'm not a finance guy, but the subtle difference in wording here gives me pause to at least investigate the question.) So what you're hearing me say is: we need sensitivity analysis. The assumed benchmarks appear arbitrary enough that we have to see how the results change when you adjust the inputs. Lastly, there's the age-old fundamentals versus intangibles question: investors make their decisions based on both. The fundamental analysis (of earnings, etc., like the article does) is not deterministic: it just gives you context. Intangibles (faith in management, broader understanding of how the market will shift and affect the firm's competitive position) matter, too. They're just, well, intangible. But also included under the umbrella of intangibles is how investor sentiment toward the company may change. If people think FB is going to make some huge announcements in the next year that will send the share price skyrocketing for a short (but not sustainable) high watermark, then that potential short-term return is worth buying. [Edit 5/25 6:57a PT - changed range from 96-00 to 96-10 based on correction. Thanks!]