| eroticsexxx |
05-22-2012 07:01 AM |
Quote:
Originally Posted by Jesus H Christ
(Post 18958895)
Oh shit, you actually bought FB stock? Lack of a awareness? - Seriously? FB core function is nothing like Google.
Last year Facebook had $3.8 billion in revenue, not profit, just revenue. We don’t know how profitable Facebook was because it was a private company. Let’s pretend Facebook’s future margins are better than Google's 2011 with 27.5%. This would mean they earned $1.045 billion in profit which would imply a P/E ratio of 95.7 and a return slightly over 1% on investment. This would also mean, FB couldn't even keep pace with inflation.
BUT Facebook is a growth investment right? Possibly, but how much growth can possibly be expected with 900 million users already, or to put it another way, nearly half of the 2.3 billion total internet users? Sure the internet will continue to attract new users, but from where? Developing worlds only have limited access to the internet?
Facebook’s main traffic is from dumbfuck Americans now figuring out most of what they write isn't important and your high school buddies don't care. Matter of fact, there's a steady stream dropping because they don't want to be associated with others knowing their lives or be somehow associated with yours.
Anyway, to achieve an 18.31 P/E ratio (like Google) holding the $100 billion valuation constant, Facebook will need to increase their revenues and "hypothetical" net income by more than 500% to $19.86 billion and $5.46 billion respectively. I don’t think it’s realistic that Facebook can increase their revenues and net income by 500% within a reasonable time either through growth in users or through generating significantly more revenue per user.
This was necessary just to justify Facebook’s opening IPO price if you think the company is comparable to Google in its prospects. If Facebook made $1 billion profit with 900 million users that means each year, each user earns Facebook roughly $1.11 on average. We know that to achieve an 18.31 P/E Facebook would need $5.46 billion in earnings, divide that $1.11 formulating the number of users required to generate this income target. That would be 4.92 billion users or, in other words, twice+ the total number of users estimated to be on the internet today.
Even with my piss poor high school math, how could you not see Facebook's future being more analogous to MySpace than to Google? Facebook isn’t an innovator. They’re not branching out into other businesses in a meaningful way, but an outlandish $100 billion valuation? FB is going to be TheGlobe.com x1000 and has NO shot of being anything like Google. WAKE UP!
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Those with no vision make themselves quite obvious.
The metrics which you discuss so confidently, such as user base and ad revenue (FB's primary source of income at present), are not applicable to FB's future growth in as meaningful a way as other sites before it. This accounts for why the vast majority of critics of FB simply can't comprehend what actually is happening and thus they bring out the MySpace/<insert website here> comparisons.
At the same time Zuckerberg can't (and shouldn't) release the full dynamics of FB's plans as a platform as yet because he needs to be the first to market with what is about to happen in the coming year. Social networking will be turned effectively on its head and others will attempt to follow suit, but it will be too late.
Most persons in the know actually expected the dip and in some circles it is hoped that the value goes as low as mid 20's in value so that the stock practically can be doubled up on.
There will be a desperate scramble for FB stock if/when even a small portion of FB's platform plans come to fruition because the price will bounce back and soar to record levels practically overnight. It all depends on how Zuckerberg and crew play their cards.
Like I said before, they can double their profits if they let it take a deep slide and buy back stock as they go, but we will see how savvy a CEO Zuckerberg really is. There is nothing like a stock that takes a massive slide and then makes an awesome comeback to spur long term investor confidence. |
