Do you think FB is overvalued? Sure it’s almost impossible to predict future FB earnings –@MShengel
A lot of people also asked similar questions and included the phrase “are we in a bubble”.
The answer is Facebook is probably not overvalued (although it’s not necessarily undervalued either). It’s a market but not a bubble. Bubbles are very very rare. In Feb, 2000 we had an IPO bubble. We never had an Internet bubble. If we had an Internet bubble then we wouldn’t be seeing so many Internet companies now at all-time highs in the stock market. The dream of the Internet came true. It’s here! We all use it every day. And companies like Apple, Google, Facebook, Amazon, Ebay are all all-time highs in profits. So that’s not a bubble.
Looking at the Super Bowl commercials about half of the commercials didn’t even put their website URLs. They put their Facebook URLs instead. This tells me what corporate America is thinking. That more and more of our ad dollars are going to be diverted from other sources (TV, billboards, Google, etc) and moved onto Facebook to get direct engagement with our customers.
The worldwide ad market is $600 billion. Facebook will be getting a bigger chunk of that market than any other Internet company before it, including Google.
Imagine the entire Internet going public. That would be worth, obviously, billions. Facebook is like a mini-Internet. We haven’t even begun to see what business models they will evolve into. You might ask, what does Facebook have to do with the US dollar? Everything. We are moving towards a world where true competition and capitalism means that every currency is allowed to flourish and compete. Right now, in the US, the US dollar has a legal monopoly. This will eventually end with the rise of alternative currencies like bitcoin, Facebook credits, and even gold. There may end up being more transactions using Facebook Credits than transactions involving the US dollar? Not tomorrow, not next year, but eventually.
You might even ask, what does Facebook have to do with the decline of worldwide violence and wars? And the answer there is also: everything.
That’s why I will never say Facebook is overvalued. Even if I’m not a buyer at the IPO.