Friday, August 03, 2012

Facebook is now $20

When Facebook went IPO at $38 on a PE ratio of 100 times, I felt that it was too high. A proper PE ratio would have been 25 times. So, the correct price should be $10 and not $38. Well, the price has now come down ot $20 and will probably reach $10 in due course.

It is strange that the highly paid fund managers were buying the share at $40 and above. And they are supposed to be the experts in the financial world!

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6 comments:

  1. AnonymousAugust 03, 2012 5:49 PM

    New IPOs usually do not offer much upside for retail investors as the multiples are already factored in. The only ones smiling are the original shareholders and underwriters.

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  2. AnonymousAugust 04, 2012 12:59 AM

    These fund managers are not using their own money to buy but others money, so not surprising. Nparks also not using own money to buy brompton bikes but tax payers money so again no surprise. It will be surprising if they use their own money. It will be surprising if those involved use their own money to hire PRC table tennis players and their own money to reward them for winning medals. Using other peoples money to buy and pay is not surprising at all and is the norm nowadays. In fact, many financial gurus teach it like Robert kiyosaki and Dennis Ng etc

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  3. AnonymousAugust 04, 2012 6:49 AM

    Kin lian, the fund managers are using or investing other people money lar

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  4. AnonymousAugust 05, 2012 10:31 AM

    FB could be worth US$38 or more if they have solid and tangible plans to increase income streams base on number of users. Unfortunately before the IPO, I suspect most of the income streams were based on assumptions but no actual plans.

    But FB still has a lot of followers, the question is how to make these users to use FB to promote and advertise their online businesses.

    I think PE multiple of 12 is about right, that is the multiple of big names like Intel and Apple.

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  5. yujuanAugust 06, 2012 12:10 AM

    Agree with above comment, a multiple PE of 12 is more reasonable, unless FB is able to monetize its operations. But, alas, FB is for social networking and the users are mainly young people or "politicians", who are not commercial people, and not likely a source of advertisers.
    Can't beat Goggle.

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  6. AnonymousAugust 06, 2012 2:41 AM

    what is PE? can anyone explain it?

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