110 ms·
Maybe they're both overvalued?
by gruntled 11y ago
Maybe they're both overvalued?
- lmm 11y agoI thought that for a while, but the thing is that Facebook's actually pulling in revenue. Internet tells me they have a PE of 60, which is high (20 is normal for a mature company) but not order-of-magnitude insane. If Facebook is overvalued then advertising as a whole is, and that doesn't seem likely in this age of metrics and PPC competition. During the '00 bubble people said Yahoo's valuation was inflated because all the bubble companies spent their money on Yahoo ads. But for my money Yahoo has turned out to be worth its bubble valuation. Even if most of its value has come from a few clever investments, well, sounds like Facebook's doing the same thing.
- gruntled 11y agoA PE of 60 is very high. A very rough rule is that the PEG (PE to Growth, where growth is earnings growth in percent) should be about 1.0. So a PE of 60 means the market is expecting very approximately 60% year on year growth.
- technotony 11y agoThat's probably what facebook is growing revenues, so maybe it's rational. this (a little out dated) chart shows that: https://marketrealist.imgix.net/uploads/2014/05/Companies-Ad-Revenue-Growth-Rates.png?w=660&fit=max&auto=format https://marketrealist.imgix.net/uploads/2014/05/Companies-Ad...
- krschultz 11y agoProbably. But if you put yourself in the shoes of the executive team at Facebook, buying WhatsApp killed off a potential threat , and it was worth 8% of market cap to do that. Everyone talking about how much WhatsApp is worth vs some other company is missing that point.