Facebook Is Worth More Than These Companies?

May.21.12 | About: Facebook (FB)

Facebook's (NASDAQ:FB) IPO assigned the company a market value of $90 billion. Since then, the company's market price plunged down to about $77 billion. Even with the plunge, the market still values Facebook more than it values many other companies including these companies:

Citigroup (NYSE:C): One of the largest banks in the world. The company earns about $11 billion annually with revenue of $65 billion. The bank has 266,000 employees all over the world and its assets near $2 trillion. The bank's market value is $75 billion.

Bank of America (NYSE:BAC): With assets passing $2 trillion and annual revenues passing $115 billion, Bank of America is valued at $73 billion. The company has over 6 thousand branches and nearly 300,000 employees, but the market thinks that the bank is worth less than Facebook is.

Siemens (SI): Siemens is Germany's GE. The company produces a well range of electronics including but not limited to home electronics, and many tools used in healthcare and engineering. Last year, the company earned near $7 billion. It is also worth about $73 billion according to the market.

Home Depot (NYSE:HD): The company operates 2300 stores that exceed 100,000 square feet each. It offers thousands of products and earns over $4 billion annually. The company is also growing aggressively by opening new stores and acquiring some smaller companies. The market prices the company at $72 billion.

UPS (NYSE:UPS): This company is valued at $71 billion by the market. The logistics company operates in almost every country in the world and delivers millions of packages on daily basis. In 2011, the company delivered 4 billion packages, generating it revenue of $53 billion. The company's net income was near $4 billion in the same year.

Kraft Foods (KFT): This is one of the largest food producers in the world. The company markets its products in more than 170 countries around the world. It has 220 production facilities in 80 different countries. The company earns $3.5 annually and its valued at $68 billion by the market.

ConocoPhillips (NYSE:COP): Valued at $65 billion by the market, ConocoPhillips is one of the largest oil companies in the world. The company earned $11.5 billion last year.

In addition, Facebook is more valuable than industry giants such as Boeing (NYSE:BA), Caterpillar (NYSE:CAT), 3M (NYSE:MMM), Honda Motor (NYSE:HMC), Ford (NYSE:F) finance giants such as American Express (NYSE:AXP), Goldman Sachs (NYSE:GS) and Mastercard (NYSE:MA), companies like Ebay (NASDAQ:EBAY) and Nike (NYSE:NKE) along with many others. Does it even make sense?

In the coming quarters, Facebook will have a huge pressure to perform. Currently the company has a lot of potential as it holds detailed data regarding every 7th person on earth; however it has failed to turn most of its potential into profits. I don't think investors will be patient with Facebook for long if the results don't come soon. Currently Facebook only earns about $650 million per year. If we sort companies by net income, Facebook compares with companies such as Ross Stores (NASDAQ:ROST) Nordstrom (NYSE:JWN) and Tyson Foods (NYSE:TSN).

Facebook's peers in net income usually enjoy a market value between $5 billion and $13 billion. If Facebook fails to convert its potential into real earnings, it may be dancing with these guys with a similar market value. Will they do it? Time will tell. For now, I don't recommend buying, selling, or shorting this stock. My recommendation is to wait a couple quarters and see how it performs financially before making any decision in any direction.

Disclosure: I am long BAC, F, BA, HD, KFT, AXP, UPS.