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sikiliza (< 20)

Facebook Shares Worth at least $1000

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May 16, 2012 – Comments (8)

The decade's most exciting IPO is underway and this might prove to be the biggest investing opportunity in our lifetime. Per our relative valuation model, it's clear that Facebook stock is currently grossly undervalued. Here's why:

Facebook users represent a cross-section of the planet in pretty much the same way that the Chinese population does i.e. a small percentage of high networth individuals, a growing middle class and a still vast percentage of low-income families.

China has a GDP of about $6Trillion with a population of roughly 1.5B. Facebook has about 750M users rouglhy half the population of China. If the China GDP and potential is a proxy for that of Facebook, this means that Facebook is worth at least half the GDP of China i.e. $3Trillion.

With 3 Billion shares outstanding including the 421 Million that will be issued at IPO, Facebook's imputed Price per Share = $3Trillion/3Billion shares = $1,000.

At $35-$38, you have a 27X upside to $1,000. How do you say "bargain of the century"?

/Sarc

Head of Research

Farcical Capital 

 

 

 

 

8 Comments – Post Your Own

#1) On May 16, 2012 at 11:24 AM, zzlangerhans (99.74) wrote:

To hell with you shortie! When Facebook reaches fair value at $10000 I'll give you a quarter at the intersection.

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#2) On May 16, 2012 at 11:35 AM, MayerMarionn (< 20) wrote:

as Jacqueline responded I'm alarmed that people can profit $7430 in 4 weeks on the computer. did you look at this web page (Click on menu Home more information)  http://goo.gl/DzsJJ

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#3) On May 17, 2012 at 12:51 PM, TMFBlacknGold (99.03) wrote:

Too bad those 750 million users of Facebook are sitting behind their computer writing "LOL" on other people's pictures. Those 1.5 billion Chinese citizens are actually creating value. 

The best valuation of Facebook is a mere $30 billion:

"Peter Cauwels and Didier Sornette, entrepreneurial risk analysts at the Swiss Federal Institute of Technology Zurich, say that financial institutions do not publish the methods they use for valuing social networking companies. So Cauwels and Sornette developed their own model, which they have made publicly available (arxiv.org/abs/1110.1319).

The model suggests that even with the most optimistic growth forecasts, Facebook's fundamental value is no more than $30 billion. Cauwels says that the company's unique status as the biggest social networking start-up gives it extra potential, worth perhaps another $30 billion. "Investors should be aware that everything they pay above $30 billion is just an option on future potential and everything above $60 billion is bubble money," he says.

Much of the excitement is based on Facebook's meteoric rise – the company has gained new users at an exponential rate since its launch in 2004. But Sornette and Cauwels say there are signs that its growth is slowing, and that the next generation is starting to think that Facebook is boring. "It's something their parents are using," says Cauwels."

http://www.newscientist.com/article/mg21428643.900-facebook-shares-are-overvalued-say-financial-analysts.html

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#4) On May 17, 2012 at 1:14 PM, WolfeFrances (< 20) wrote:

just as Aaron explained I am stunned that some one can earn $7441 in a few weeks on the internet. did you read this web link(Click on menu Home more information)  http://goo.gl/EsMXZ

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#5) On May 18, 2012 at 2:34 PM, sikiliza (< 20) wrote:

@ zzlangerhans  - I am still waiting for that quarter of a $1,000 per share you promised. Like someone once said, "price is what you pay, value is what you get". Never forget that.     

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#6) On May 18, 2012 at 2:48 PM, SUPERMANSTOCKS (56.33) wrote:

FB is a bomb, and I thought it might be. I stayed out! Google was priced higher than FB was and will continue to do better than FB will.

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#7) On May 18, 2012 at 3:14 PM, LoweryDanieln (< 20) wrote:

like Tiffany explained I didn't even know that a single mom can make $5148 in a few weeks on the computer. have you read this web page (Click on menu Home more information)  http://goo.gl/GWQxN 

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#8) On May 23, 2012 at 3:22 PM, Indianagol (< 20) wrote:

No.

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