May 17 2012
08:13 am

Facebook is expected to make their IPO debut on NASDAQ tomorrow (symbol FB) at a price of up to $38. Depending on the final price (and how they cook their books), their P/E will be somewhere in the range of 80 to 100. They hope to raise $15 billion on a float of approx. 400 million shares.

This puts Facebook's market cap at approx. $100 billion or more. To put that in perspective, Facebook is:

• Bigger than McDonald's
• Two and a half times bigger than Ford
• Bigger than FedEx and UPS combined
• Bigger than Kraft Foods and General Mills combined
• Bigger than Boeing and Lockheed Martin combined

This is insanity. Bonus: Zuckerberg will control 57.3% of shareholder votes, meaning he's answerable to nobody.

R. Neal's picture

I've read that the brokerages

I've read that the brokerages are limiting purchases to preferred suckers customers and that little guys will have a tough time getting in, if for some reason they wanted to.

A smarter play might be to short them around $12 or $15. The only problem will be the margin call when the lemmings and fanboys run it up to $100 before the crash.

[Disclaimer: This is not investment advice. It's a joke. I'm just kidding around. Let me buy you a beer.]

Somebody's picture

This is probably the

This is probably the beginning of the end for facebook, or at least the beginning of its severe humbling. I wouldn't be surprised if Mark Zuckerberg's strategy will be to find a way to cash out as a billionaire before he's 30, and let other suckers ride the stock back down to facebook's actual value.

Maybe he has enough hubris to really believe it's worth all that, but I bet he knows otherwise, and will hand the keys over to others as it drives off the cliff.

Brian A.'s picture

(link...) Sundaram says


Sundaram says judging from this price these investors seem to believe that the company's profits will double, and then double again, and then double again — all within the next few years.

For that to happen, Facebook will need to attract 10 percent of all advertising dollars spent on the planet "across all media – print, billboards, radio, television, Internet," Sundaram says. While this is theoretically possible, Sundaram says it's "an extremely low probability."

Last year, Facebook had just over $3 billion in global ad sales. TV ad sales in the U.S. alone last year were $68 billion.

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