Thursday, May 24, 2012

Facebook & the Crest of Dot-Com-Bubble #2

Facebook defies logic.
If Facebook is valued at $100 billion, its valuation would be 33 times its advertising revenue, compared with 5.5 times for Google. To sustain its value, Facebook would need to grow its revenues by 41% percent per year for the next five years. That is very hard to do for any company, especially one of Facebook’s size. … Even a minor hiccup in the business model could lead to significant losses for purchasers."
There's a bunch of friends and family stock in folks hands that is locked up for 6 months. You can bet they will dump. Insiders cashing out on the IPO, massive potential insider selling to come, who’s left to buy? 
Mahendra: "Unfortunately, I don’t see any exciting future for FACEBOOK in the longer term. In fact I won’t surprise at all if FACEBOOK valuations wipeout huge in the next six year. I wish my Astro predictions came wrong for FACEBOOK because I really like Mr. Mark Zuckerberg. They need to change facebook Astro chart and that is only possible if they change the name of FACEBOOK.
Behavioral economics is the new "psychology of denial".