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Why is Facebook worth more than Boeing, American Express, and McDonald’s?

Lawrence Lewitinn
Talking Numbers
Why is Facebook worth more than Boeing, American Express, and McDonald’s?

Facebook is now worth more than a lot of established companies with more revenues. But is it now overpriced?

Just a few years ago, Mark Zuckerberg was barely old enough for the Mickey Mouse Club. Today, the company he founded joined the $100 Billion Club.

With shares trading near $41, Facebook is now worth just about $100 billion. That doesn’t make it the most valuable company in the world. In fact, Facebook doesn’t even breach the Top-10. Apple’s top spot, at close to $454 billion, remains unthreatened by the college dropout’s website. What’s more, Facebook’s $1.8 billion in revenues is about 1% of Apple’s sales and a fraction of the $37.7 billion Apple made as profit in the last twelve months reported.

But Facebook is now worth more money than McDonald’s or American Express or even Boeing.

(Read more: McDonald's now on the value menu)

It’s also worth more than Goldman Sachs which is valued at $73 billion had $36.3 billion in revenues and $8.6 billion in profits.

So, why is Facebook, which analysts expect to earn $1.7 billion this year, commanding such a premium to the other better established companies.

(Related: Facebook: Governments demanded data on 38,000 users)

In a word: growth. Mobile, which once was a concern for the company is on fire, and it’s one of the reasons John Stephenson, portfolio manager at First Asset Investment Management, says there’s more to Facebook’s valuation than meets the eye. But Enis Taner, Global Macro Editor at RiskReversal.com, says the charts on Facebook give reason to worry.

Who is right? Watch the video above to hear both sides and decide.


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