Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Barron's Pushes Facebook (NASDAQ:FB) Under $21, So Where Do We Go From Here?


Barron's says Facebook is worth $15. Are they insane?

MINYANVILLE ORIGINAL The party's over for Facebook (NASDAQ:FB) -- at least according to Barron's.

This weekend, writer Andrew Bary declared Facebook to be worth $15 a share, throwing a freezing bucket of water on the bull camp that was reinvigorated by CEO Mark Zuckerberg's September 11 appearance at the TechCrunch Disrupt conference, at which he gave a sunny outlook on the company's mobile advertising business. (See: Wait a Minute! Did Facebook's Mark Zuckerberg Really Say Anything New?)

A purely anecdotal look at the Twit-O-Sphere indicates that some folks are rolling their eyes at the Barron's story, viewing it as a rehash of old news and thus a reason to jump into the stock.

Now, I've knocked Barron's many times in the past for what I viewed as incorrectly bearish articles on particular stocks. Nonetheless, they deserve props for correctly slamming the Facebook IPO back in May.

But we're many, many dollars away from Facebook's failed $38-per-share IPO.

Let's take a look at Barron's big bad bear case.

Here are the main points:

1. The stock is dramatically overvalued relative to Apple (Nasdaq:AAPL) and Google (Nasdaq:GOOG).
2. Wall Street's earnings estimates do not reflect stock-based compensation, which overstates profitability.
3. Due to heavy infrastructure spending, consensus 2015 estimates of about $1.05 per share may not be achievable.
4. Last week, research firm eMarketer cut its estimates of Facebook's revenue.
5. Mobile ads, including Sponsored Stories, may be screwing up the user experience.
6. The app model favors more specialized sites like Twitter, Pinterest, LinkedIn (Nasdaq:LNKD), Yelp (Nasdaq:YELP), and Trulia (Nasdaq:TRLA)
7. Lock-up expirations could weigh on the stock.

We can argue some details here and there. Are Apple and Google really appropriate points of comparison? And isn't it a little soon to worry about 2015 estimates?
Position in AAPL
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos