The market is currently allowing high PE ratios. It is all right to have a high PE.
Did you know a multiple and PE are two different things entirely?
Does $2.00 in the next rolling 1 year seem reasonable? They are projected to have $1.41 for 2014 and $1.83 for 2015.
PE is measured from GAAP earnings and multiples are measured from non-GAAP earning's numbers. FB reports its numbers on a non-GAAP basis and analyst's estimates are non-GAAP also.. The short definition of non-GAAP earmomgs are number that do not include special items like stock and option grants as well as other one time charges. Last quarter the non-GAAP number was 30% higher than the GAAP number reported which was $0.32. Most other quarters the difference between GAAP and non-GAAP were more than 30%.
Some interesting math:
70.00/(.7)(2.00)=50 Please note this is with earnings of $2.00 which I believe is a high number.
Also note that the number of outstanding shares are going to increase substantially by close to 20% over the next year. While the eps will be reported with new shares that are calculated on a weight averaged basis, the numbers will be adjusted for the PE retroactively thus changes previously reported EPS numbers.
With all this said, the market accepts a high PE for stocks like FB. FB wont become a value stock any time soon. FB price appreciation actually has nothing to do with PE. The participants in the market expect earnings to grow in the future.
For the near future, FB will have a high PE, when it doesn't we will know that it is mature which means that it wont grow a lot.
CMG went up a little more than 10%. A little math............10% of 70 does not equal $30.00.
Also FB has 10 times the market cap of the micro cap stock CMG.
Smaller stocks have more momo.
Here is something that tweaks every sensible notion in my brain.
You are comparing FB to GOOG. FB is supposed to report revenue of $2.81 billion and GOOG reported just short of $16 billion. For FB to be like GOOG is right now, it would need to increase its revenue by over 5.6 times. At 200, FB would be 1.5 times GOOG. With current acquisitions, FB has very near 3 billion shares. That means that the future revenue would have to be 8.5 times what it is now if we make this comparison to GOOG. This can be done in 2 to 3 years?
My question to you is: Why are you making a comparison to GOOG? Say something like I believe that FB will continue to grow and market will allow the highest capitalized stock in the world to have a pe of over 200. That is more logical than comparing to GOOG. At least the numbers add up.
If you make a comparison, the numbers have to be somewhere in the realm of reason. Does it strike you as kind of an almost impossible task to double revenue in each of the three years to achieve what you say in 3 years or triple revenue in each of two years to achieve this number in 2 years.
Sometimes I think people just throw stuff out there and believe in a fantasy market. Others just blindly pump.
If you truly want to be a good investor, you have to be rationale. Comparing FB to GOOG in the aforementioned manner has no basis.
I am not trying to be mean, arrogant, or anything else but it drives me nuts to see numbers thrown out with no reason for those numbers.
Options are not a good earnings indicator. They represent what gamblers expect. The options can be an indicator of bare sentiment but if a stock is going through earnings calls are not predictive.
How do GOOG and FB compare? FB is at 68 and goog is almost 10 times as high. So a $20 move on GOOG is a $2.00 move on FB. Plus the net move on GOOG from a day before the earnings was $10.00.
There is no comparison and FB will move either up or down on volition. How high it goes is based on FB's performance and the market reaction not GOOG's earnings.
AAPL never been anywhere near a trillion dollars.
How do you propose that FB will produce the 250 billion dollar revenue in a few years.............that is the rev required to reach that cap? That is over 30 times what they produced last year.
Didn't your mom tell you not to exaggerate?
I don't see the 10% up days in recent history in AMZN or GOOG. In Fact they are not much higher than they were 4 months ago for GOOG and a year ago for AMZN. GOOG does not have a higher PE than FB.
With that said, the rest of the field you listed are all 1/10th to 1/30th the cap of FB. They cannot be compared. A smaller cap stock can move much faster than a larger cap stock.
Please note: This is not a commentary on where FB is going but how do you relate a $15 jump on a $600 stock like GOOG to a similar jump on a $70 stock like FB?
A rise or drop will be based only on Facebook's results and reactions of the market notsome other equity. A $15 rise in GOOG is like a $1.50 rise in FB. Just saying so we can get the numbers straight. Whether news is good, bad, or mediocre, FB will do what it does. It will not go up $15 just because GOOG went up $15.00.
It will go where it goes depending on the market and the reaction. Currently the short interest is 44.56M which is not high. It is 2/3 daily volume which isn't much.
Puts would help protect your long position. If you feel like it could drop a lot, it would be a good idea. The cost for a small drop would be prohibitive if you will do anything more than a short term expiry..
65 appears to be the center line and max pain. Its going to depend on momentum direction and volume. If FB gets and upward momentum, it probably doesn't get pulled to 65 and may go to 70. If it continues its path today, 65 is possible. Despite oe I think OI is fairly small and my (sideline )bet is 68 for Friday. If it is at 65, I will look at a back spread into earnings.
shake shake shake Sonora shake your body line shake shake shake Sonora shake it all the time...............
I couldn't resist :D
Why would you buy a 45/47 (I am assuming vertical spread). Let me explain to you what a spread is.
You are selling one option 45 and buying an option at 47 and you paid .13. Why didnt you just pay .15 and just buy a call. If you understand spreads, you are limiting your profit to $2.00 and you have to wait until OE to collect it. Miost people who trade vertical spreads, trade them near the money or atm.
Lets look at your spread. You paid .13 plus commish so that makes your spread $.26. If you sell your spread at oe, you would buy to close your short call for price plus arbitrage and you would sell your other call for price minus arbitrage. Depending on how many contracts you initiated, your max gain would be $1.70.
Let me ask you a question: Why would you not just buy the 45 call for what would be around $.30 and now it would be worth at least $25.00. If you think of a typical vertical spread, you are using one of the options to reduce the price of the other call. If the options are near the same in price, it is unthinkable to initiate a spread.
Also this spread is not fully valued until oe.........That means January 2015.
Killing it?.........Nah. Stephen, you are making this up. If you buy otm options, good for you. If you initiate far otm vertical spreads, I think your broker would laugh at you.
Have you ever heard delta neutral. Far otm is dollar neutral. Please if you can show me other strategies legitimate sources for far otm spreads, I would love to see it. Your options strategies are the same as your math. I already have you pegged. You are a nickle option gambler.
FYI.......A little trick for you bud. If you dont lift your pencil or there are no holes, the function is continuous. Tan(0)=0. Asymptotes are at (lets put it in degrees for you) x=90 and x=-90. By definition the interval that includes x=0, tanx is continuous as long as it does not approach the vertical asymptotes. I don't need to Google but you migjht :D.
I told you I would ignore you but this is too much fun.
2.6 billion is a bit of misnomer. After the acquisitions, there will be in excess of 2.78 billion shares and 2.83 billion dilutive shares. The float is increasing by approximately 50 million shares a quarter on a yearly trend.
With that said 2.6 billion is not a small amount. If the yearly trend continues, there will be 3 billion shares in a years time. At the time of the ipo, there were 2.14 billion shares.
With this current growth in shares, there should be no expectation of a split.