The way that valuation of a company works is that the multiple of market cap over annual revenue is supposed to reflect (mainly) expectations of growth. This m

The way that valuation of a company works is that the multiple of market cap over annual revenue is supposed to reflect (mainly) expectations of growth. This multiple for Google is less than Facebook's by a LOT, because Google, as a relatively mature company working off of a larger revenue base, is expected to grow more slowly percentage-wise, all else held equal (this has been borne out by the vast majority of companies, and is pretty much common sense, as doubling sales is a lot harder to do when one is already doing tens of billions of dollars in sales). The fact that Facebook is growing more slowly than a company with much lower expectations of growth instead of living up to its expectations of hypergrowth (as implied by the valuation) is a signal that the current growth expectations (as implied by the valuation) are too high (hence the "all else held equal" part of the last paragraph: if a company isn't performing as well as it should, then it's of course possible that it'll grow more slowly than a larger competitor with lower expectations of growth). This of course ignores the possibility that FB comes up with an amazing revenue-boosting innovation like AdWords and begins to fulfill their expected growth rate. Things like "search advertising has different dynamics to [sic] social advertising" can't just be completely removed from consideration. They're precisely what determine if Facebook is inaccurately valued or if the huge growth expected from it will occur/continue.