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I think it is just making its way towards a more realistic number. FB makes money and they are not a bad company, the stock was just way too high.

Retric 14y ago
With a P/E of 123.25 I think it's still got a long way to fall. Still I expect that will take a while. I think FB is reasonable prospects and I would be happy to buy FB with a P/E of 20, but the people don't want to sell anywhere near that price so it's looking like a long slow decline.
- JonnieCache 14y ago
  Amazon's P/E is currently 191.93 I personally wouldn't touch FB with someone else's barge-pole, but that single number isn't proof of anything.
  - adamc 14y ago
    That P/E explains why I wouldn't buy Amazon stock either. It's a strong company, but that is a ridiculous P/E.
    - pja 14y ago
      P/E only carries meaning for stable companies that aren't growing. If a company is investing for the long term, then their P/E might look terrible but they may be laying a base for huge profits in the future. Of course they might also be throwing money into a hole in the ground, but looking at the P/E ratio isn't going to tell you which of those are going on. NB. Amazon's razor thin profit margins are what would worry me if I had a pile of AMZN stock, not their P/E ratio.
    - rorrr 14y ago
      "Why Amazon May Be Worth 179 Times Earnings" http://contrarianedge.com/2012/07/26/valuex-vail-2012-thoughts-part-1-why-amazon-may-be-worth-179-times-earnings/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ContrarianEdge+%28Vitaliy%27s+ContrarianEdge%29 http://contrarianedge.com/2012/07/26/valuex-vail-2012-though...
  - InclinedPlane 14y ago
    Amazon's revenue is over 10x that of Facebook, and it's earnings are low at the moment because they've been expanding like crazy. However, Amazon is a leader in several large and quickly growing industries (retail goods, e-books and other digital goods like music, and "cloud" services). Do Amazon's activities warrant a market cap that's about twice their current annual revenue? That's a pretty easy bet to make. Do facebook's activities warrant a market cap that's over twenty times revenue and is on the same scale as the entire global advertising industry?
samstave 14y ago
So whose fault is it exactly that priced this so poorly? Personally, I think this was a fraudulent deal by GS/Morgan Stanley -- Given all the criminality in banking thats been painfully obvious for years - I think this was a deliberate over valuation to allow them to dump shares immediately make a ton and let the stock drop. Knowing that even though they did this, Facebook was not going to go under or have their actual business affected. I can't believe that there is not a hell of a lot of WTF thoughts and anger on the inside of FB at this. Does anyone know the sentiment of FB employees over all this, especially employees who have a sizable amount of stock?
- tatsuke95 14y ago
  >"Personally, I think this was a fraudulent deal by GS/Morgan Stanley -- Given all the criminality in banking thats been painfully obvious for years" Please point me to a link that shows all of the banks and employees that have been charged with crimes. >"I think this was a deliberate over valuation to allow them to dump shares immediately make a ton and let the stock drop." A stock trade is a two way transaction. A holder of shares doesn't get to just "dump" stocks; someone has to be on the other end of the deal. For every seller there is a buyer. Why would they want the stock to drop, rather than have it go through the roof, allowing them to cash in at a higher price? That makes no sense. >"Knowing that even though they did this, Facebook was not going to go under or have their actual business affected." Have you stopped to consider that Facebook's business model is the real problem here? Probably not. It's far easier to go along with the anti-bank populist sentiment. >"Does anyone know the sentiment of FB employees over all this, especially employees who have a sizable amount of stock?" If they are to be angered at anyone, it should be at the Facebook insiders who dumped their stock.
  - ryguytilidie 14y ago
    "Personally, I think this was a fraudulent deal by GS/Morgan Stanley -- Given all the criminality in banking thats been painfully obvious for years" Please point me to a link that shows all of the banks and employees that have been charged with crimes. I hope you don't actually think that the lack of being charged with crimes means no crimes were committed. This is an awful line of logic.

Retric 14y ago

With a P/E of 123.25 I think it's still got a long way to fall. Still I expect that will take a while. I think FB is reasonable prospects and I would be happy to buy FB with a P/E of 20, but the people don't want to sell anywhere near that price so it's looking like a long slow decline.

JonnieCache 14y ago
Amazon's P/E is currently 191.93 I personally wouldn't touch FB with someone else's barge-pole, but that single number isn't proof of anything.
- adamc 14y ago
  That P/E explains why I wouldn't buy Amazon stock either. It's a strong company, but that is a ridiculous P/E.
  - pja 14y ago
    P/E only carries meaning for stable companies that aren't growing. If a company is investing for the long term, then their P/E might look terrible but they may be laying a base for huge profits in the future. Of course they might also be throwing money into a hole in the ground, but looking at the P/E ratio isn't going to tell you which of those are going on. NB. Amazon's razor thin profit margins are what would worry me if I had a pile of AMZN stock, not their P/E ratio.
  - rorrr 14y ago
    "Why Amazon May Be Worth 179 Times Earnings" http://contrarianedge.com/2012/07/26/valuex-vail-2012-thoughts-part-1-why-amazon-may-be-worth-179-times-earnings/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ContrarianEdge+%28Vitaliy%27s+ContrarianEdge%29 http://contrarianedge.com/2012/07/26/valuex-vail-2012-though...
- InclinedPlane 14y ago
  Amazon's revenue is over 10x that of Facebook, and it's earnings are low at the moment because they've been expanding like crazy. However, Amazon is a leader in several large and quickly growing industries (retail goods, e-books and other digital goods like music, and "cloud" services). Do Amazon's activities warrant a market cap that's about twice their current annual revenue? That's a pretty easy bet to make. Do facebook's activities warrant a market cap that's over twenty times revenue and is on the same scale as the entire global advertising industry?

samstave 14y ago

So whose fault is it exactly that priced this so poorly? Personally, I think this was a fraudulent deal by GS/Morgan Stanley -- Given all the criminality in banking thats been painfully obvious for years - I think this was a deliberate over valuation to allow them to dump shares immediately make a ton and let the stock drop. Knowing that even though they did this, Facebook was not going to go under or have their actual business affected. I can't believe that there is not a hell of a lot of WTF thoughts and anger on the inside of FB at this. Does anyone know the sentiment of FB employees over all this, especially employees who have a sizable amount of stock?

tatsuke95 14y ago
>"Personally, I think this was a fraudulent deal by GS/Morgan Stanley -- Given all the criminality in banking thats been painfully obvious for years" Please point me to a link that shows all of the banks and employees that have been charged with crimes. >"I think this was a deliberate over valuation to allow them to dump shares immediately make a ton and let the stock drop." A stock trade is a two way transaction. A holder of shares doesn't get to just "dump" stocks; someone has to be on the other end of the deal. For every seller there is a buyer. Why would they want the stock to drop, rather than have it go through the roof, allowing them to cash in at a higher price? That makes no sense. >"Knowing that even though they did this, Facebook was not going to go under or have their actual business affected." Have you stopped to consider that Facebook's business model is the real problem here? Probably not. It's far easier to go along with the anti-bank populist sentiment. >"Does anyone know the sentiment of FB employees over all this, especially employees who have a sizable amount of stock?" If they are to be angered at anyone, it should be at the Facebook insiders who dumped their stock.
- ryguytilidie 14y ago
  "Personally, I think this was a fraudulent deal by GS/Morgan Stanley -- Given all the criminality in banking thats been painfully obvious for years" Please point me to a link that shows all of the banks and employees that have been charged with crimes. I hope you don't actually think that the lack of being charged with crimes means no crimes were committed. This is an awful line of logic.