Eric Jackson, Contributor
The hyper-ventilating over Facebook’s (FB) IPO filing yesterday is remarkable. Now I know what Google‘s IPO would have been like if Twitter had existed.
I think Facebook is a great business. It’s just not a great investment at $100 billion.
If it’s true that it achieves a $100 billion valuation, you will be buying a company that trades at 27x last year’s revenues. If it goes up to $130 billion in the first 3 days after the IPO (which I think it will), it will be trading at 35x last year’s earnings.
By way of comparison, when Google (GOOG) IPO’ed in 2004, its $85/share price was 15x its prior year’s revenues.
So, the Facebook bulls come back is that this is a “platform company,” with 845 million users, a big “moat,” and can come up with a whole bunch of ways to monetize that base in the future.
OK. I grant you that there are many ways Facebook can make money in the future. They could charge the New York Times (NYT) and other media companies desperate for traffic through the nose to have a “Facebook Connect” feature on their pages.
However, for Facebook to deserve (loaded word, I know) a $100 billion valuation, I would expect rocket ship growth. The trouble is that we don’t see that in the actual numbers.
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