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OP is only giving half the story. FB earnings are, in a sense, artificially low. They are dumping money into expanding and growing. FB wants good earnings but,
by MichaelApproved 13y ago
OP is only giving half the story. FB earnings are, in a sense, artificially low. They are dumping money into expanding and growing. FB wants good earnings but, right now, that's not as important as growing users and use. Of course there will always be money spent on growth but to what extent. When they go from dumping money into growth, P/E will be more meaningful in the typical sense.
- wavesounds 13y agoInvesting in growth is only an excuse for high PE if you are growing though, if the trend in the article continues and they maintain this PE ratio then maybe they're throwing good money after bad
- InclinedPlane 13y agoI was talking about revenue. Yes, they are growing. They are expanding their revenue. They have to in order to justify their valuation. But they need to grow at unsustainable rates for a fairly long time for that valuation to make sense. Unless they completely pivot the company they would, as I mentioned, need to grab significant fraction of all of Earth's advertising revenue, in all media. It's unreasonable to assume that current share holders are investing in facebook out of some belief in an unannounced, unplanned, speculative pivot into a different industry, that's either clairvoyance or rank stupidity.