“It’s an interesting question: If Facebook is going to be worth $96 billion at its IPO, or 25 times trailing sales, then why isn’t Apple worth $2.7 trillion? The obvious answer is that everyone’s using different metrics to value the two companies,” Tim Worstall writes for Forbes. “At which point the questions become, but yes, should we be using such different metrics?”
The estimation of the two values comes in this Wall Street Journal piece:
“Facebook is significantly overpriced and this is clear by looking at the price of the company relative to either sales or earnings,” says Brian Hamilton, chief executive at Sageworks, a firm that analyses privately-held companies. “Investing in the Facebook IPO may turn out to be a great investment, but right now, the stock is clearly not a bargain.”
But Hamilton maintains Facebook has a valuation problem. He even attempts to put Facebook’s valuation into perspective by comparing it to Apple, the most valuable company by market capitalization in the world. “If Apple, which manufactures tangible products, was valued at a multiple comparable to Facebook, Apple’s market capitalization/value today would be approximately $2.7 trillion,” he says.
Read more in the full article here.
MacDailyNews Take: Here’s another question: Is Facebook the short of the decade?
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