GOOG has 45% growth, FB has 25% growth, GOOG has 50 Billion revenue, FB has 4 Billion Both depends
I'm don't accept the premise that the "Value" of these two companies is solely predicated on the relationship that exists 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 "Algorhythm" used by you to arrive at your price conclusion. The problem with your analysis....is the Data. 2013 GOOG revenue is projected to be $52 Bill. FB Rev = $6.45 Bill. GOOG has 330 Mill Shrs outstanding. FB has 2.2 Bill. Therefore......Rev/Shares for GOOG = $157. FB Rev/Shr = $2.93. Applying your Algorythm.... 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 your logic.....and 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 the FB opportunity through a different lense. And, I'm glad that I did. Happy Thanksgiving.