It's not really an issue of whether they are integrated to mobile - it's more about their ability to generate revenues from mobile.
One of the reasons is the speed of their mobile app - extremely slow. And they still haven't been able to fix that.
http://seekingalpha.com/article/606961-morgan-stanley-s-2-4-billion-facebook-short?source=kizur nice article here
if hedge funds/hft firms were able to short the stock on the first day it would have gone way below its offering price. Morgan Stanley bought about 60million shares at $38-38.01 to support it.
Facebook’s stock should trade for $13.80 Commentary: Here’s a fair-price calculation for Facebook By Mark Hulbert, MarketWatch CHAPEL HILL, N.C. (MarketWatch) — Well, then, what should be the price of Facebook’s stock? Rather than endlessly rehashing the events that have taken place over the last week, it is this question that investors should be asking. Surprisingly, however, few are doing so. And yet, courtesy of a just-released study, calculating a fair price for Facebook’s stock isn’t as difficult as it might otherwise seem. The study is entitled “Post-IPO Employment and Revenue Growth for U.S. IPOs, June 1996–2010.” Its authors are Jay Ritter, a finance professor at the University of Florida, and two researchers at the University of California, Davis: Martin Kenney, a professor in the Department of Human and Community Development, and Donald Patton, a research associate in that same department. ( Click here to read a copy of their study. ) The researchers found that the revenue of the average company going public between 1996 and 2010 grew by 212% over the five years after its IPO. Assuming Facebook’s revenue grows just as fast, and given that the company’s latest-year revenue was $3.71 billion, its annual revenue in five years’ time will be $11.58 billion. Since Facebook FB -1.76% is most often compared to Google GOOG -0.95% , let’s assume that its price-to-sales ratio in five years will be just as high as Google’s is currently: 5.51-to-1. You could argue that this is an overly generous assumption, of course. But it nevertheless means Facebook’s market cap in five years will be just $63.8 billion — 30% less than where it stands today. Assuming that the total number of its shares stays constant, that works out to a price per share of just $23.26 — in contrast to its recent closing price of $33.03. Ouch. Actually, however, the news is even worse: No one is going to invest in Facebook shares today if its price will be 30% lower in five years. So, in order to entice someone to invest in it today, Facebook needs to offer a handsome return. Assuming that its five-year return is equal to the stock market’s long-term average return of 11% annualized, Facebook shares currently would need to be trading at just $13.80. Double ouch. Don’t like that answer? Try focusing on earnings rather than sales, and you get only a marginally different result. Assuming its profit margin stays constant (instead of falling as it could very well do as it grows), assuming its P/E ratio in five years will be just as high as Google’s is today, and assuming that its stock will produce a five-year return of 11% annualized, Facebook’s stock today should be just $16.66. How can Facebook investors wriggle out from underneath the awful picture these calculations paint? By assuming that its revenue and profitability will grow faster than the average IPO between 1996 and 2010 — and not just by a little bit, either, but a whole lot faster. Of course, it’s always possible that Facebook will be able to pull that off. But, as Professor Ritter pointed out to me earlier this week, “the bigger a company gets, the harder it is to maintain percentage growth.” And Facebook is already huge — larger, in fact, than all but 47 other publicly traded companies in the U.S. So my back-of-the-envelope calculations for this column could very well be too optimistic rather than too pessimistic. Given all this, Ritter said that a market cap “of $63 billion ... five years from now seems like a very reasonable scenario.”
This is a silly calculation. I agree that FB is overpriced, but his methodology is based on things like the average IPO's growth rate or that somehow FB would be valued just like Google. That's just dumb. Every company is different and *should* be valued differently. They may be similar in that they both make money off of ads, but they have totally different models, different expense structures, etc - there's simply no reason that the two companies need to be or would be valued at the same P/E or P/Sales rations. Amazon and Walmart are in the same industry but don't remotely have the same valuation.
Comparable valuation is a perfectly valid valuation technique. It's just one valuation technique, but certainly has its merits. It's fine if you want to argue that Google isn't a good comp for Facebook, though I'd argue that it's probably as good a comp as you're likely to find. There maybe more applicable direct social network comps, but none of Facebook's size, strength, and none that are public. Walmart and Amazon would not be comp'd against each other, in any universe. The analysis points out it's own flaws. That Facebook very well could and actually might grow much quicker than the "averages" used. I certainly think their top line has tremendous growth potential. To that end, from a ratio perspective, those that factor in growth would be more relevant.
