really breh?
Breh I was gonna address that post but its obvious they dont understand how the markets work.
@JKFrazier
What I was trying to get across is that it doesnt matter what we think facebook is worth (especially intangibles). Facebook has an intangible product but that is simply because it offers a service (90% of revenue is from adverts). Their offering is no different from the same way CBS makes money airing commercials. The markets base their valuations on news, growth prospects and primarily revenues for growth companies/income for mature companies. Positive outlooks for all those components create demand to buy shares. Supply < Demand boost the share price because shareholders can ask for a better price. If it was 100% certain that a company wouldnt grow why would anybody buy its shares ? Obviously there are other metrics when it comes to Oil/Gas companies, Mining, Construction etc etc. but generally P/E, EV/EBITDA or Sales and P/CF hold.
If the company doesnt meet those forward estimates or get close enough to them...the valuation will drop and a short seller (what I would be in the example) will make money. Just this Friday, LinkedIn crushed its Q1-2013 estimates. CRUSHED...but still dropped 10-12%. The reason being that it had a weak outlook ahead...therefore analysts adjusted their forward estimates and lowered the valuation based on some of the ratios I just mentioned. But yall dont get it . I compared Facebook to 4 companies with very similar business models and the fact that all the mature companies have equal metrics proves that I picked the right comparables. You think the fact that Google, Priceline and Ebay have P/E ratios of 25-26 is a coincidence. You my dude but come on breh.
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