How low will Facebook go?
The market isn't buying the stock's $38 IPO price, pushing shares below $34 Monday. Where is this stock headed?
They breezed away Thursday with an IPO price of $38 a share. Was it too high? Definitely. But hey, Facebook hauled in $16 billion, and now has enough money to do and become just about anything it wants. Early investors like Goldman Sachs (GS) also got a nice piece of the pie.
Those who bought into Facebook on Friday with dreams of big money, however, are left holding the bag.
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Facebook shares barely held on to the $38 support level Friday as the deal's underwriters presumably used all the tools at their disposal to prop up the share price. Throw in the various screwups from Nasdaq and, well, the words "faceplant," "facerip" and "IPOcalypse" are on the minds of some.
It looks like the underwriters gave up Monday, and Facebook shares dropped below $34 at various points throughout the day and closed at $34.03.
Now, the question on investors' minds is how low will the stock go? At the $34 price the stock hovered at Monday, it was trading at about 57 times projected earnings for the next year, according to FactSet research (and cited by The Wall Street Journal). Google (GOOG) trades at about 14. Apple (AAPL) trades at 10.3.
Former analyst Henry Blodget crunched the numbers in a very smart post and guessed that a fair price for Facebook would be between $16 and $24. Another analyst, Pivotal Research Group's Brian Wieser, gave the stock a $30 price target with a "sell" rating.
Other analysts were more positive, expecting the stock to grow in the future. Michael Pachter of Wedbush Securities put a $44 price target on the stock. A Susquehanna analyst picked $48.
Are those targets too optimistic? The stock has clearly lost all momentum, and probably won't gain back any juice until the company offers an impressive quarterly earnings report. But that may not happen anytime soon, as Facebook's user growth and advertising revenue growth are slowing. The company's capital costs are high, too, as it builds out data centers.
So where do you think Facebook shares are headed?
Its a social site, so how does it get revenue if most users block advertisers? are the advertisers stupid or something?? so if advertisers pull out, the stock will really bottom as it will be worth less.
As an end user, I am getting sick of Facebook and how it keeps trying to get me to use timeline, I have tried timeline remove and it helps when viewing profiles and as soon as Zuckerburg finds a way to block the app (which I am sure he is trying to do because its "his" web site) ill be leaving Facebook.
Before anyone invests in Facebook, they should take a look at all the disgruntled users of timeline (and its gonna get worse) and think to themselves "what other disaster does Zuckerberg have up his sleeve?" Remember, ITS WE THE USERS THAT MAKE THE SITE! There is no service offered with the site (meaning you don't use Facebook to buy stuff etc. not that anyone would want to due to security issues) so it does nothing more than share messages and pictures. If Facebook po's enough users they will leave in droves and your investment will be in the toilet. So all I can say is drop it like a hot potato.
Remember that Google's IPO had a forward PE of 118 and the stock price was super volatile for months following the IPO. Facebook's forward PE of around 60 seems reasonable if the revenue growth projection is believable. The problem is that people don't have as much faith in Facebook as they did in Google, and when compared to Google, Apple and Microsoft's current forward PE of around 10 to 15, the price of Facebook stock seems a little crazy. However, look at Amazon's PE right now - 180 with a forward PE of 85! Compared to that, the Facebook stock price might be close to what it should be at for now, maybe still a little bit high, but as long as the next quarterly earnings report is good (really good), expect the price to hold and then start going up as revenue increases. Of course, if Facebook earnings don't beat expectations, expect the stock to drop like a rock down to a more reasonable PE of around 15, putting the stock price at something like $16.
Let me know how that works out for you user. I got your 28 bucks right here Bozo.
Wow, they say a rising tide raises all boats.
Apparently the Facebook ship has a hole you could drive a bus through.
Their business plan has more holes than a sieve.
Where is Sheryl Sandberg now; Facebook’s COO? Doesn't she have anything to say about this disaster? Does she only do interviews when she's giving away investor money to noble causes and charities, or when she’s hinting that she might run for a high public office one day? Why haven't we seen one interview in the Mainstream Media with Facebook or Wall Street execs who were on the inside of this IPO? What a con job; a Disneyland fantasy dream come true for the insiders, and a nightmare for everyone on the other side of it.
This stock was overinflated by the same people who wrote this article. 1 week ago, it was the greatest thing since sliced bread - TO EVERYONE - save a few contrarians. Sell all you want, it makes it cheaper for the rest of us.
Maybe next time every college grad with a grand will read BEFORE investing and hold on just a little longer when they don't double their money overnight.
Facebook will bottom out around $16 a share I think and then will do an about face with the new ad growth !! That's the point at which the dumb money gets out and the smart money gets in !! Facebook only needs to be right 50% of the time to make (900000000) people very happy campers !!
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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