Facebook today fell below $20 for the first time since the IPO at $38. Is it now a bargain? I just had a look and its generating about $600m cash is still valued at $50bn despite the drop and has a P/E of 45. Cash barely doubled in the last 12 months. I think there is a growing realization in investors that while Facebook has captured a huge consumer base, selling things to them is not working very well, and for example my son chatting with friends or updating his profile with a picture of last nights bash, is not buying Gucci bags or Lexus cars. If my memory serves the original offer price for shares was around $25, and hype kept adding to greed to drive up the offer. I think if they sold for $10-12 I might buy some, their is potential, but a P/E over 40? Not for my money.
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