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Will Facebook Go Lower?

September 6, 2012 by  
Filed under Around The Net

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Facebook is still overvalued and analysts are starting to agree with us that the company could fall to about $13 a share.

SmartMoney’s Jack Hough is being quoted by Forbes as saying that Facebook should be worth about half what is now – about $29.52 billion, or just a tad over $13 per share. Hough compares Facebook to Google which trades at 3.6 times its projected revenues for 2014. Analysts expect Facebook to have $8.2 billion in sales that year which means you just multiply this figure by about three.

All makes sense and is a similar view to what I said when Facebook issued its daft IPO and people lost their shirts and underpants on the deal. Part of the problem is still that Facebook has not worked out a good way to make money from advertising and it has not got an effective mobile strategy.

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