7 ms·

I wouldn't be too surprised to see Facebook stock head down the same path. If Facebook was trading at the same P/E ratio as Google, the stock would be worth $8

I wouldn't be too surprised to see Facebook stock head down the same path. If Facebook was trading at the same P/E ratio as Google, the stock would be worth $8 a share.

freehunter 14y ago
At least it's an extra data point to show we're not in a startup bubble. If we were, these stocks would be skyrocketing no matter how bad the company was doing.
- nirvana 14y ago
  In fact, how bad they are doing would be an asset-- "We're running as big a loss as we can so we can grow as fast as we can!" -- I think Amazon is still using that line. (though they are growing fast.)
  - wtvanhest 14y ago
    They also are not running a loss.
    - microtherion 14y ago
      True, they are not, but I recently came across this rather stunning plot: http://www.mondaynote.com/wp-content/uploads/2012/05/Amazon-Revenue-and-Earnings.png http://www.mondaynote.com/wp-content/uploads/2012/05/Amazon-... Does this look like a hugely profitable company to you?
      - wtvanhest 14y ago
        I don't think a graph that shows what an income statement of a high growth company always looks like should be considered "stunning". [Apple will be an exception here, but they are a very rare case, almost every other growth company looks like Amazon].
  - bri3d 14y ago
    They're not operating at a loss, so I'm not sure how they're using that line. I totally see your point (and agree) but there's an important distinction to make in Amazon's case, because there's a big difference between aggressively re-investing your profits into growth and aggressively burning other people's money to grow.
- chestercheetaz 14y ago
  the fact that all these social media stocks are declining is PROOF that we've been in a bubble, and now that bubble is deflating.
  - astrodust 14y ago
    Facebook and GroupOn are too small a sample size to draw this conclusion. Have you accounted for general market trends? Seasonal cycles? Comparisons to other IPOs? Contrast with other types of companies that aren't part of your perceived bubble?
nirvana 14y ago
AAPL can generally be bought for under a 14 PE these days. An equivalent FB price would be $4.37. FB profit growth over the next decade may be much bigger than Apple's, but I have a lot more uncertainty about what it will be, so its hard to estimate a fair PE. Meanwhile there are Apple shares on sale every day that give me a rock bottom PE for a company with very persistent and fast growing profits. PE isn't everthing but I wish the press would talk more in terms of comparable valuations than the stock dollar price which doesn't really tell you much.
chestercheetaz 14y ago
FB is already headed down this path. Today (6/4/12) is the 11th trading session for FB, and the stock is down ~ 27% from it's IPO price. That's an averaged ~2% decline per day. Get ready for a fun ride DOOWWWWWNNN!

I wouldn't be too surprised to see Facebook stock head down the same path. If Facebook was trading at the same P/E ratio as Google, the stock would be worth $8 a share.

freehunter 14y ago

At least it's an extra data point to show we're not in a startup bubble. If we were, these stocks would be skyrocketing no matter how bad the company was doing.

nirvana 14y ago
In fact, how bad they are doing would be an asset-- "We're running as big a loss as we can so we can grow as fast as we can!" -- I think Amazon is still using that line. (though they are growing fast.)
- wtvanhest 14y ago
  They also are not running a loss.
  - microtherion 14y ago
    True, they are not, but I recently came across this rather stunning plot: http://www.mondaynote.com/wp-content/uploads/2012/05/Amazon-Revenue-and-Earnings.png http://www.mondaynote.com/wp-content/uploads/2012/05/Amazon-... Does this look like a hugely profitable company to you?
    - wtvanhest 14y ago
      I don't think a graph that shows what an income statement of a high growth company always looks like should be considered "stunning". [Apple will be an exception here, but they are a very rare case, almost every other growth company looks like Amazon].
- bri3d 14y ago
  They're not operating at a loss, so I'm not sure how they're using that line. I totally see your point (and agree) but there's an important distinction to make in Amazon's case, because there's a big difference between aggressively re-investing your profits into growth and aggressively burning other people's money to grow.
chestercheetaz 14y ago
the fact that all these social media stocks are declining is PROOF that we've been in a bubble, and now that bubble is deflating.
- astrodust 14y ago
  Facebook and GroupOn are too small a sample size to draw this conclusion. Have you accounted for general market trends? Seasonal cycles? Comparisons to other IPOs? Contrast with other types of companies that aren't part of your perceived bubble?

nirvana 14y ago

AAPL can generally be bought for under a 14 PE these days. An equivalent FB price would be $4.37. FB profit growth over the next decade may be much bigger than Apple's, but I have a lot more uncertainty about what it will be, so its hard to estimate a fair PE. Meanwhile there are Apple shares on sale every day that give me a rock bottom PE for a company with very persistent and fast growing profits. PE isn't everthing but I wish the press would talk more in terms of comparable valuations than the stock dollar price which doesn't really tell you much.

chestercheetaz 14y ago

FB is already headed down this path. Today (6/4/12) is the 11th trading session for FB, and the stock is down ~ 27% from it's IPO price. That's an averaged ~2% decline per day. Get ready for a fun ride DOOWWWWWNNN!