How Low Can Facebook Go?

The following video is part of our "Motley Fool Conversations" series, in which Chief Technology Officer Jeremy Phillips and senior technology analyst Eric Bleeker discuss topics around the investing world.

Despite continuing analyst price targets pushing past $40, Facebook has seen its share price sinking like a stone recently. Eric and Jeremy look at where a baseline for Facebook might be. The company has $7 billion in cash to work with, and Eric points out how the company's P/E isn't reflective of its current earnings ability as the company, as Facebook has purposefully held back on using more real estate on its site for advertising.

In the end, neither Eric or Jeremy would buy Facebook as a display-advertising company, or even one with a payment platform. However, while Jeremy says he'd never buy Facebook until it proves it's not just a display-advertising company, Eric says he'd become extremely interested in Facebook below $20 on the promise of steps it could take to create more meaningful advertising. To see their full thoughts, watch the video.

Facebook recently became the largest company ever to IPO. Yet for many of the reasons discussed in this video, the buzz around the company has proved to be off-base, as Facebook has deep problems converting its millions of members into sources of revenue. We've created a new report, "Forget Facebook -- Here's the Tech IPO You Should Be Buying," that details a much better social-media stock that has a longer runway for growth than Facebook. The report won't be available forever, so click here to get access today -- it's totally free.

At the time thisarticle was published Eric Bleekerand Jeremy Phillips have no positions in the stocks mentioned above. The Motley Fool owns shares of Baidu, Facebook, Google, and Microsoft.Motley Fool newsletter services recommendBaidu, Google, and Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.