GOOG has 45% growth, FB has 25% growth, GOOG has 50 Billion revenue, FB has 4 Billion Both depends
First, I don't accept the premise that the Market Value" of FB or GOOG is predicated solely on the relationship between their "Share Count" and "Expected Revenues". In fact, I can think of a number of other metrics that should be considered in arriving at a "Fair Market Price"...as I'm sure you can. But, let's say I accept the "Algorithm" used by you to arrive at your price conclusion. My first concern is with the Selected Data. GOOG 2013 revenue is projected to be $52 Bill. FB Rev = $6.45 Bill. GOOG today has 330 Mill Shrs outstanding. FB has 2.2 Bill. Therefore......Rev/Shr for GOOG = $157. FB Rev/Shr = $2.93. Applying your Algorithm.... FB should be priced at 1.86% ($2.93 / $157) of GOOG $666 market value..... or $12.38. However, the projected 5 year growth rate you quoted for GOOG is not 45%.....its 13.45%. The projected growth rate for FB = 26.95%....double that of GOOG. So, applying your logic.....if $666 is a fair price for GOOG....given its growth rate....then $24.76 would be a Fair Market Price for FB. Current FB price....$24.32. That said.....do you think GOOG is overvalued or undervalued? Because if you believe...as analysts do...... that GOOG should be $800....or 20% higher than its current price....then using the logic of your "Relative Pricing Model"....a Target Price of $30 for FB....is also completely reasonable. Those are my thoughts. BTW: thank you for taking the time to submit your analysis. Your comments forced me to take a look at FB through a different lens. Happy Thanksgiving.