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Monday, 27 August 2012 10:49

Facebook has further to fall

Written by Nick Farrell



Analysts agree with us

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. Still it is nice when people who are paid a lot more money than us, agree with our figures and reasoning.

Nick Farrell

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