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Wednesday, August 1, 2012

Facebook Shares Could Fall ANOTHER 50%

Facebook Shares Could Fall ANOTHER 50%

With such a short history, the release of Facebook's (Nasdaq: FB  ) second-quarter earnings is an important opportunity to review the valuation in light of new data. Prior to the company's May IPO, I warned investors to steer well clear of the shares. While the near-40% decline the shares have suffered since the offering may tempt investors into believing they can now secure an attractive entry point, after consideration, my advice is unchanged today.
Facebook falls shortIn an article published just after the IPO, I used a graph similar to the one below to show that Facebook's growth path was far outstripped by Google's (Nasdaq: GOOG  ) . The graph matches up annual revenues for both companies over five-year periods: 2000 through 2004 for Google versus 2007 through 2011 for Facebook:


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