Investor's Opinion

Facebook Not Remotely Worth 38$

Published: 2012-05-23 09:45:00 EDT by Unknown

On Friday, FB IPO'd at 38$. The thing is that they only earned 43ยข per share last year. That puts their current P/E ratio at over 88. Even if we look at foward looking estimates. They are still over priced to a P/E of about 55.
Now lets look at GOOG. They only have a P/E of about 18. So if we do the math of using FB earnings times GOOG P/E we have a relative price for FB of less than 8$. So far, the market agrees as FB price dropped to 31$ and is struggling to not drop any more.
My opinion? I'm putting it to practice. I've put an order in for under 8$. That is my opinion, you can take it, or leave it. Disclaimer: See bottom of page.
FB - Facebook, Inc.
GOOG - Google Inc
IPO - initial public offering
P/E - price-to-earnings ratio

Labels: stock strategies, trade terminology in use

Updated: 2012-09-01 00:29:11 EDT