Why Facebook Shares Got Unfriended by Investors
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Facebook (NAS: FB) are getting unfriended by investors today, down by as much as 10%, after Barron's ran an article over the weekend calling the company overvalued.
So what: The report pegs Facebook's value at just $15, which doesn't appear to be derived from any model or estimates. Rather, the report just guesses that "perhaps only $15" is the right price. The article compares Facebook by traditional valuation metrics to much more mature peers like Apple and Google, saying those companies offer more compelling value.
Now what: Facebook is also very generous with stock-based compensation, which allows the company to partially veil those expenses by using non-GAAP figures that the Street focuses on. Mobile monetization is very much up in the air at this point for Facebook, and the report has little to no confidence that Mark Zuckerberg will be able to navigate that transition. Within the next couple months, Facebook will also see lockup expirations on shares following the IPO, which may add additional selling pressure on shares.
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The article Why Facebook Shares Got Unfriended by Investors originally appeared on Fool.com.Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Apple, Google, and Facebook.Motley Fool newsletter serviceshave recommended buying shares of Google, Apple, and Facebook.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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