By now everyone is aware of that Facebook's (FB) performance in the secondary market has been a flop. Having IPO'd at $38 per share, one week later the stock now barely lingers at $31. Among many other excuses, it isn't hard to see people pointing at the extraordinary valuation as the culprit for the weak performance.
So the question beckons: Is there another Facebook in your portfolio? I will posit that for many portfolios, the answer is "yes".
For instance, let's consider company "X" and run a few comparisons:
Facebook trades at a trailing P/E of 82, using $87.3 billion as market cap and a ttm net profit of $0.72 billion. Company "X" trades at a trailing P/E of 175;
Facebook trades at a 2012 forward P/E of 58, using today's 2012 EPS consensus of $0.55. Company "X" trades at a 2012 forward P/E of 179;
Facebook has 2012 estimated EPS growth of 27.9%. Company "X" has a 2012 EPS estimated decline of -13%;
Facebook is growing revenues at 44.7% y-o-y in its most recent quarter. Company "X" grew revenues at a 33.4% rate in its most recent quarter;
Facebook has a $87.3 billion market capitalization. Company "X" has a $95.9 billion market capitalization;
And for the icing on the cake, Facebook is rumored to be making a smartphone. Company "X" is also rumored to be working on such a device.
By now, you've already guessed what company "X" is. It's that other potential Facebook in your portfolio. You just have to look at the statements above - all of them true. Would you really want to be holding company "X" in your portfolio, given those?
Company "X" is Amazon.com (AMZN). And it will produce a face palm as well, given time.
Disclosure: I am short AMZN.
