Facebook IPO heralds burst of social network bubble
Facebook is going for IPO in early 2012. It is expected to be at least US$100 billion in value. Its Ebitda is expected to be about 2 billion for 2011. Thus,it is selling at posssibly 50 times EV/Ebitda.
Berkshire earns 13 billion in net profit and has only a market cap of 184 billion. (PE approx. 14)
Facebook will be worth more than Goldman Sachs and close to Bank of America.
Google,its competitor is selling at 11 times of EV/Ebitda with market cap of 162 billion.
Even with high growth in Facebook users, there’s a limit to how fast online advertising and revenue from facebook credits can grow. Facebook is overvalued, its IPO will signal the bursting of the social network bubble.
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