I completely agree. Based on earnings, or even realistic projected earnings, Facebook was worth nowhere near the $32 IPO price. Facebook is worth $15 a share. The stock trades at $22 now so it’s still overvalued.
“Anyone who owns Facebook should be exceptionally troubled that they’re still trying to ‘figure out’ mobile monetization and had to lay out $1 billion for Instagram because some start-up had figured out mobile pictures better than Facebook,” says one institutional investor.
Ritholtz also agrees with a $15 valuation. Apple and Google have massive earnings. Amazon still has very high P/E. However, their Web Services, Kindle, and Amazon Prime are driving real business and income. In five years they could be ginormous. Facebook is a great social media service and they made $1 billion last year. But they need to figure out how generate more income. Meanwhile lock up restrictions on 933 million shares of Facebook expire before the end of the year, something which certainly will drive the price lower.