FB is a growth stock so what can we imagine in the future based on some of the prolific growth stories of the past?
Here are the monsters (and there are many more) of the past:
TIE 5 to 19 in one year
AAPL 10 bagger from 2005 to the present
BIDU amazing growth form 14 to 110 in two years
GG a monster 18 bagger from 2000 to 2012
CSCO from 2 bucks to 60 in 5 years
INTC 5 to 50 in 10 years
QCOM from 4 to almost 90 in 4 years
AMZN 5 to 100 in 1 year
YHOO 4 to almost 110 in 4 years
MSFT almost a 100 times growth in a decade
NILE from just under 40 to a 100 in a year from 2007 to 2008
CROX 20 and some change to almost 70 in a year
ICE 40 to 100 in a years time
CME doubled every year for three years after their ipo
GOOG doubled in a half a year and then double again the next year
When we think of growth we look at companies like GOOG and say wow. Over a little less than a decade it rose about 8 times. CROX more than tripled in a year. NILE more than doubled and ICE and CME went parabolic.
If you look at it the recent growth stories, they are amazing but there aren't 20 baggers or in MSFT case almost a 100 bagger in a decade. Why not now? CSCO, INTC, QCOM, MSFT, and others like IOM and IMNX all started out at caps in the millions to hundreds of millions and they grew. Many stocks now come out fully valued. FB came out in its ipo valued at just over 100 billion. Many stocks were market favorites also when they came out and people knew that they could grow tremendously. Todays market favorites have a lot of growth priced in.
Even companies like GOOG came out at around 25 billion. The trend has been to value companies highly during the ipo. It is increasing now. There are growth stories but if someone is going to find the monster growth stock they have to do their own DD. If people invest in the big market debutantes like FB, the growth will be limited. That is not to say FB wont grow but its PPS wont move lockstep with its growth.
The stories for growth will be catching a LULU. Finding a company that is down like PCLN and getting the 30 bagger.
Remember that growth is risk. The best bet for FB is to invest when it has a clear picture of what it will do. Gone are the days when a risky bet could produce a 20 bagger. Some people may believe that FB will be a 2 trillion dollar stock which is 4 times the largest cap stock on the market now. While I will not put a cap or a floor on a stock, I will not value a stock with so many unknowns and I wont listen to the talking heads pushing the value of many stocks. I will do my own DD and everyone should do the same.
Making good sense.
Wonder what is the maximum potential for FB.
I think eventually it may grow beyond $100Billion, may even be $200B after some years. But I don't want to see it straight up....
Too much temptation for profit taking and short selling, esp when there are so many shares available.
I agree. Right now FB is quite a high valuation. It doesn't have the same growth prospects. It is hard to say what will happen in the future but I will wait and see and base my judgement on how they perform.