One Q does not make the company next AAPL or GOOG. FB has to show consistency in increasing revenue as well as bottom line. with 1.5 Billion users, it is hard to achieve 50% growth going forward because users are not going to increase that much and Advertisers are not going to increase that much. It will come down to 30 and may go to 38 by next earnings report-3 months from now. Lot of IPO buyers are waiting to get even. That will be the top unless FB shows up 50% growth again for next 2 Qs.
Well Apple makes $42 Per-Share with $146 Billion in Cash. GOOG Makes $34 Per-Share with $50 Billion in cash and FB makes a Nickel Per-Share ( That's Five pennies pretty skimpy ) with $9 Billion in cash. So earnings are very important with establishing a valuation.
Do not compare with AAPL. It is operating in a fragmented industry with a lot of competitors (think Samsung as one). There is a constant pressure from the competition and the company needs to keep developing new products because they have very short life cycle (AAPL failed to offer anything new recently and that was disastrous for its market share and the stock price...). I think the maximum PE AAPL ever traded at was in high 30s.
GOOG started in a fragmented industry (it was battling yahoo and msn search sites in early 2000s) but in its industry once you have the dominant market share you start reaping network effects. And they create huge barriers for new entrants. So investors are happy to pay premium. In 2004 GOOG was trading at around 150 PE. I googled an article from 2004 where the author said that people were crazy to pay $165 for an internet search engine company. That it was another internet bubble. So funny reading it now...
FB already emerged as a leader in a fragmented industry. It is almost a monopolist now. The barriers for newcomers are impenetrable (what are the chances that somebody could create a competing social network website and sign up 1 bln users...). Until now FB failed to successfully monetize its buisness. Now they found a way... And investors are happy to pay a big premium for pretty much a monopolist.
Don't ever compare AAPL and GOOG to FB. AAPL is to this day the most successful company to ever trade on Wall Street. Product cycle when you're making the best of the best products in that sector don't come over night. Recent earnings were over $35 Billion with $7 Billion in profit. FB made 5 cents per-share. Five cents? AAPL has over $146 Billion in cash. Apple has sales of $470 Million a day and over a Billion a week in profits. Apple pays $12 per-share in Dividends or a 3 Percent a year pay-out.
GOOG Has over $55 Billion a year in revenue and over $50 Billion in cash. GOOG Has a market cap of $295 Billion Approximately. FB can't support a $200 Billion cap. Right now FB is trying to support a market cap of over $80 Billion with one earnings surprise. And believe me there was a lot of surprised investors. The big question is, will the advertisers get a ROI for their advertising dollars?
At best, there remains a lot of uncertainty with FB going forward. Remember, FB has One Billion Non-paying subscribers, again non-paying. I would like to see an updated version of actual time spent by users looking at ads? And what percentage of those users buy any of the products advertised? What if Asia and the other countries aren't full of self-seeking narcissistic people who don't have to stroke their egos with a Face Book account?
I have a position in FB from the low twenties. I'm a traditional investor who doesn't understand everything there is to know about a given business model. I do sleep better with having XOM, P&G, KR, AAPL and MSFT as my major holdings. I just felt that FB offered a compelling valuation in the high teens low twenties. I know a lot of people use FB. It's just will the novelty wear off over time?
And along come the nay sayers, FB has a larger market cap than Ford and a better P/E than Amazon yet everyone loves to bash it. Facebook is now setting the standard on mobil advertising and still you guys are sellers. By most standards FB should be approaching $100.00 not $38.00. duhhhhh
Come down from your euphoria of a 30% gain and look at reality. There are 2.41 Billion shares out there! Only about 20% of that was traded these last two days and probably 5% of that was in the hands of flippers and day traders in for the short term. That leaves roughly 2 Billion shares that haven't been touched yet. A lot of those are the bagholders from the horrid IPO and a lot more are from those who are sitting on a decent profit as of right now. Here is what I predict will happen next week. The gap will fill without a doubt. It may not go back to 26 but it will definitely touch 30 or even 29. When this thing drops a dollar or so the bagholders are going to sell to lessen their loss. The ones with the profit are going to sell to lock in gains and hope to buy back in at a lower price. Selling begets selling. You will be lucky to see 38 by the next quarter and there will be a lot of volatility between now and then. There is no product with this company and anyone you ask will tell you they had no idea there are ads on facebook.
Sentiment: Strong Sell
unless your business is stealing from people - stealin CODE, stealing CONTENT BY CLAIIMING YOU OWN IT, by stealing images, by stealing homes from PRICE FRAUD TRAPS, this is not unexpected - it is on par for thieves who have a FREE PASS TO STEAL FROM MAINSTREET.