This is an era of social media sites. Many people all over the world are using Social media sites for both their personal and professional use. Facebook can be considered as the most top rated social media site, and the usage of this site is increasing day by day. Many of us are spending more time in front of Facebook, and it will be relatively high when compared to the time we spend with our better halves. This popularity of Facebook has impacted in its share value as well. Facebook is in the open market for nearly a year, and the shares are still 25% of the opening amount of $38.00.
The reporters at Barren said on Sunday that, the all the investors are over valuing the company and it should be trading at $25.00 per share. According to these reporters, the market is still not in the right track about the company’s growth. According to the quarterly report of the company, the desktop revenue of the organization is flat, and most of the ad revenue is generated from mobile phone. On the other hand, the expenses were increased by 60% and this is absolutely an alarming factor. Facebook mainly trusts on technological growth, and they think that their revenue will increase drastically from mobile phones as the use of smart phones is in its peak. Finance experts have dual opinion in this concern, but Barron says that the state of Facebook is not at all stable, and the shares are over-hyped or overvalued.
The most interesting factor is that, Facebook is trading more than 70 times of its projected earnings in 2013. This is a clear cut evidence which proves that the shares of Facebook is overvalued by investors. On the other hand, Google, the giants are trading 20 times lesser than its expected annual earnings. The market capital of Facebook is now more than $71 million, and this amount is mainly relying on the expected future growth which may happen due to mobile revolution. Facebook is expecting a drastic growth in mobile ad revenue in the future, and this is one of the key factors which helps them to stay tall in the market.
According to Barron’s, investors are too friendly towards Facebook shares. They are not properly calculating the future, and it is sure that they are over valuing the share of Facebook. Barron’s are of the opinion that there is no point in giving the value of more than $25.00 for a Facebook share. According to them, almost all investors have a soft corner towards Facebook, and they are highly friendly towards them.
Barren’s actually doubt Facebook ability to create huge revenue from the ads which Facebook is expecting from Facebook revolution. They are of the strong opinion that, a Facebook share is not worth more than $25.00. Investors are actually puzzled on barren’s thoughts and they are trying to tame their conscience to reach the best results.