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Facebook (FB) gets the Barron's treatment, making the cover along with an assertion it's worth...

Facebook (FB) gets the Barron's treatment, making the cover along with an assertion it's worth $15/share. "Success in mobile is no sure thing," writes Andrew Bary, not surprisingly focusing on the rapid shift in the company's user base away from desktops. Mostly ignored by the sell-side, the firm has a whopping stock-based compensation expense. Toss this in, and even at $15, the shares would trade at 35X 2013 estimates.
Comments (20)
  • pretty optimistic, IMO
    22 Sep 2012, 09:16 AM Reply Like
  • When was the last time Barrons got something right? I'll wait... (crickets chirping...) still waiting... (crickets chirping...)

     

    Facebook has got money and thousands of the brightest minds on the planet focused on the mobile challenge. I am certain they will resolve this issue in less than a year. Apple just gave them a huge gift with the iPhone 5... namely additional screen real estate. Some of the shift away from desktops will be to high resolution tablets and TVs with more screen real estate that you can shake a stick at! A year from now this will be the biggest 'cudda, woulda, shoulda' story on the street. Don't bet against FB unless you have a very, very short time horizon!
    24 Sep 2012, 12:34 AM Reply Like
  • All the pollyanna comments in the world would never justify its IPO market cap of $100 bill. Just calling a spade a spade.
    24 Sep 2012, 09:13 AM Reply Like
  • However, if the users of facebook are getting complacent or possibly even bored with it's application (look up MySpace as a great textbook example). Facebook's value is only as good as it's ability to keep a fairly fickle user base happy and entertained. The next best thing that comes along that causes it's users to start moving across. Just watch that # unique visitors per month start to degrade and what happens to that stock then. It's a house of cards. Why people thought a site like this would be a great investment, I just don't get it. Most of those guys probably don't even use it or understand why it's such a draw right now.
    24 Sep 2012, 05:18 PM Reply Like
  • $15 was my initial target when it was 38, but am recently sticking to my $5.15 target price. A short-term rally doesn't change the reality of its weak growth model (ad engine, search, and mobile)
    22 Sep 2012, 09:57 AM Reply Like
  • The old expression " you've been suckered" will be replaced by the contemporary expression " you've been Zuckered". Only hope for the 38 dollar a crowd is the law suit.
    22 Sep 2012, 10:59 AM Reply Like
  • or start selling some OTM covered calls to lower average price.
    22 Sep 2012, 11:31 AM Reply Like
  • People still read Barron's???
    Can't believe its still in business?
    22 Sep 2012, 11:50 AM Reply Like
  • I can't believe that anyone reads anything any more except the misleading headlines. Sound bites is what most inhale these days! No one wants to know a real good analysis anymore...
    22 Sep 2012, 01:36 PM Reply Like
  • $2 drop in share price today says the a LOT of people still think their analysis is very credible.
    24 Sep 2012, 04:56 PM Reply Like
  • Or a lot of folks just shorted based on a "trusted" source and will get bit in a week. Hard to tell really....
    24 Sep 2012, 04:58 PM Reply Like
  • This weekend’s Barrons cover story is about Facebook. The author attempts to explain why the stock price should be $15 instead of Friday’s close near $23. In one of the poorest articles I have read of the well-respected Barrons, Andrew Bary doesn’t bring any new, significant arguments to the much discussed and now overblown case for the shorts.

     

    Surprisingly, Bary could only devote two paragraphs to the bull side. But let’s examine Bary’s points individually. Point one latches onto the paradigm shift towards mobile platforms away from desktop usage and brilliantly observes that mobile users spend less time on Facebook than they were when they were sitting on their assets in front of a desktop computer. Duh?

     

    Bary next points out the relatively high PE of Facebook as compared to the more mature companies Apple and Google and asks what the shares are worth. He cleverly points out that pro forma earning estimates may be too high because Facebook is partially compensating employees with restricted stock. Apparently Bary doesn’t believe that the highly compensated Wall Street analysts who composed those very same estimates aren’t aware of this decades old practice in Silicon Valley.

     

    Next, the author quotes an unnamed ‘intuitional investor’, undoubtedly one whom is part of the approximately 15% short of the outstanding float, that criticizes the purchase of Instagram. Bary follows up by recalling the last earnings report from July (!) and says many investors were disappointed. Also, he revisits the paradigm shift the shift to mobile and tries to persuade us that Facebook’s increased visits from mobile users is actually bad.

     

    Lastly, he regurgitates the upcoming expiration of locked-up restricted shares, the Holy Grail of shorts.

     

    Nowhere in his story does he quote any person bullish on the shares, nor mentions Thursday’s news of the company announcing that it would begin charging marketers for posting consumer offers.
    23 Sep 2012, 06:01 AM Reply Like
  • I bet that Facebook will be trading between $15 - $17 in next few weeks. Altough all the fund managers and institutional investors will keep buying so the prices stabilize but as soon as the stcok hits $25 by summer next year --- a massive sell of is going to happen... wait and watch
    23 Sep 2012, 06:22 AM Reply Like
  • This is what going to happen with facebook --

     

    In Next few weeks Facebook will be trading between $15-$17.
    23 Sep 2012, 06:22 AM Reply Like
  • every stock in the world is over priced,including apple..
    23 Sep 2012, 06:23 AM Reply Like
  • Two things impressed me about Zuckerberg and Facebook. First, the general public and investing community cannot wrap their brains around the business model because of its intangible nature. There's something about physical products that defines value. The new digital age doesn't naturally lend itself to such valuation.

     

    And second, that Mark can't wrap his brain around the necessity for Facebook to start developing tangible assets. Were Facebook, for instance to embark upon a full line of electronic device products - most especially a smart phone and tablet computer - with an operating OS to enhance his subscribers experience, I dare say that Apple and Google would be scared to death. There are about a hundred million people who would buy the Connect FB1 smartphone were it to hit the shelves Christmas of 2013.
    24 Sep 2012, 02:55 AM Reply Like
  • You might be right, but the amount of money that would have to go into such an animal would wipe out Z's fortune, not to mention that they have no idea what they are doing when it comes to a tangible market, I'm pretty sure they are still flying rather blind (not that there are any roadmaps where they are going as it is).
    24 Sep 2012, 07:52 AM Reply Like
  • Agreed!
    3 Oct 2012, 05:47 AM Reply Like
  • My money is on Zucks come back with some tangable products so don't be so hasty in selling only buying I will be in the future.
    24 Sep 2012, 08:46 AM Reply Like
  • I was long FB at $21 before it dropped to ~$18 ... so I sold at $22.50 when I got the chance.
    Now, thanks to Barrons.. I can get back in at $15 and hold for a couple of years .. till it goes to $25+
    24 Sep 2012, 08:57 AM Reply Like
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