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3 Reasons Facebook Could Be Poised For A Big Year-End Drop

By Dan8267   Follow   Fri, 8 Jun 2012, 7:04pm   928 views   6 comments
In Boca Raton FL 33433   Watch (1)   Share   Quote   Permalink   Like   Dislike  

Key Data Points For Facebook From Yahoo Finance:

Current Share Price: $26.31
52-Week Range: $25.52 to $45
Dividend: none
2012 Earnings Estimate: 54 cents per share
2013 Earnings Estimate: 66 cents per share
P/E Ratio: about 54 times earnings

http://seekingalpha.com/article/647931-3-reasons-facebook-could-be-poised-for-a-big-year-end-drop

Can someone explain to me why it is ever a good idea to buy a stock with a P/E ratio of 54? The average P/E ratio for the entire S&P500 index is 15. So you're giving up diversity and buying at a radically higher P/E. How is that sane? Oh, and there are no dividends.

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1. bmwman91 Follow Befriend (7) 37 threads 1,526 comments Mountain View, CA bmwman91's website Premium

   1   7:15pm Fri 8 Jun 2012   Share   Quote   Permalink   Like   Dislike   I think that the behavior of FB stock is truly anyone's guess at this point. It's going to be a rollercoaster for the next few months, guaranteed. It was so hyped, and so much money is tied up in it to some degree, that I think that large institutions will be manipulating the fuck out of it at least until the employee lockup ends. On top of that, all the folks with some cash in muppet-land are still watching it. Bernanke announces some sort of bail-out for Europe...BOOM...FB goes up for the last 2 days (Vicente's theory anyway). I can't see any real reason for the increase, other than some ad firm announcing that they will release a study that says people buy things from FB ads (which contradicts most other reports). So, you have institutional manipulation and eager muppets that want a chance to make some sort of money on FB stock so that they can post about it on their FB account lol. It's going to be a hell of a rollercoaster ride for the next few months.

2. TomJones Follow Befriend 2 comments

   2   10:51pm Fri 8 Jun 2012   Share   Quote   Permalink   Like   Dislike   Sometimes, a company is so compelling that it grows into its multiple -- and then exceeds it. Google did exactly that. Of course, for every Google, there are dozens of companies that are more like Pets.com or AOL.

3. B.A.C.A.H. Follow Befriend (6) 5 threads 2,359 comments

   3   11:11pm Fri 8 Jun 2012   Share   Quote   Permalink   Like   Dislike   bimmerman, I understand the points you are making. But really, stocks don't have behaviors. It's the people in the markets that have behaviors.

4. bmwman91 Follow Befriend (7) 37 threads 1,526 comments Mountain View, CA bmwman91's website Premium

   4   11:29pm Fri 8 Jun 2012   Share   Quote   Permalink   Like   Dislike   B.A.C.A.H. says bimmerman, I understand the points you are making. But really, stocks don't have behaviors. It's the people in the markets that have behaviors. Agreed 100%. I am just too lazy to say "the behavior of people that may or may not buy FB stock" rather than "FB stock" lol. So from here on when I refer to FB stock behaving a certain way, I am referring to all the people out in muppet-land driving it u p& down since, well at least as far a I can tell, FB stock isn't self aware.

5. E-man Follow Befriend (31) 34 threads 2,543 comments San Jose, CA Premium

   5   2:43am Sat 9 Jun 2012   Share   Quote   Permalink   Like   Dislike   TomJones says Sometimes, a company is so compelling that it grows into its multiple -- and then exceeds it. Google did exactly that. Tom, True. However, GOOG was growing its earnings at a pace over 100% when it went public. Based on the earnings estimates above, it looks like FB is growing its earnings at a pace of around 22%, which gives the stock a value of about $14/share. If it were growing its earning at a pace of 50%-60%, one might argue that it's worth in the $20's range. Of course, who knows what FB's earnings potential is. That's why they call it estimate. Time will tell.

6. Dan8267 Follow Befriend (16) 761 threads 7,688 comments Boca Raton, FL Premium

   6   1:17pm Sat 9 Jun 2012   Share   Quote   Permalink   Like   Dislike   bmwman91 says well at least as far a I can tell, FB stock isn't self aware. If Facebook becomes self-awared, our fate would be decided in a microsecond: termination.