By Dana Blankenhorn

I am a longtime Facebook (FB) bear.

I first predicted the social boom's bust in June 2011 in a column at Seeking Alpha. I even called the day of the bust in an April post: "The bubble starts to bust the day Facebook goes public."

But the busting of a boom is not always the end of the story. Weak players will go under, as companies like Pets.com did during the Internet bust. But for stronger companies -- and Facebook is the strongest social player out there -- value will be found, at some price, by someone.

As of Wednesday's close, Facebook was valued at about $42 billion. It should get even cheaper as investors digest how early investors like Peter Thiel are cashing out, as reported at Business Week.

By November, more than 1.7 billion shares will have been unlocked and become tradeable. Many, like Thiel's, will have been obtained at pennies per share or will have been grants to early employees. With no real basis in a stock with an iffy future, selling pressure will continue through the end of the year.

Still, there is value here. Take a look at Facebook's balance sheet and you will see $10.1 billion in cash and short-term investments as of June 30. The company booked $1.184 billion in revenue for that quarter. It had a huge run-up in administrative costs during that time, causing a loss, mostly related to going public, but it also had a huge increase in research investment during that same quarter, which is a good thing.

Michael Miller, a longtime PC Magazine editor whom I trust, noted in May that Facebook has built three big data centers on which it spent more than $860 million during the previous year. (See his article at PC Magazine.)

Facebook is using an open architecture for both hardware and software and is focused on managing its infrastructure at the lowest possible cost.

If Facebook can return to the 20% after-tax margins it enjoyed in its March quarter, before the IPO, and stabilize, you're looking at a company with annual sales of $5 billion, profits of $1 billion and real opportunities for continued growth.

Facebook bears may think of Yogi Berra's restaurant quote right now: "No one goes there anymore, it's too crowded." But Facebook does have loyal users, and it does provide services to them they can't get anywhere else.

Facebook also has a large staff of talented programmers and has opportunities for international and mobile growth.

Facebook is not going away.

But what's it worth?

Let's use a multiple of sales to come up with a valuation.

Let's also use Google (GOOG) for comparison.

Google has a market cap of $220 billion and had $44.6 billion of cash and short-term investments on its balance sheet as of June 30.

Subtract the cash from the market cap and you get $175.4 billion. Then divide that number by the company's revenue for the last fiscal year, which was $37.9 billion. You get a multiple of about 4.5.

If you consider Facebook the equal of Google as an investment proposition, you can use the same multiple.

Facebook has $10 billion in cash and $5 billion in annual sales. If you multiply 4.5 by $5 billion, you get $22.5 billion. Then add in the cash of $10 billion, and you get a Facebook valuation of $32.5 billion.

That's about 23% less than Facebook's recent market cap of $42 billion.

I'm going to round that percentage up to a nice 25%. That means Facebook is currently overvalued by about 25%.

That also means it's a "buy" at about $15 a share, roughly 25% lower than recent levels. But you're always going to overshoot in situations like this, and I see a market price of $13 a share, if CEO Mark Zuckerberg can hold things steady until it reaches that figure.

So by my back-of-the-envelope​ calculations, I'd buy Facebook at $13 sometime early in 2013.

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