With valuations from 75-100 billion and stock price ranges somewhere from $28-35 per share, this company will be the biggest internet IPO of our time. My time referring to me being a "very" late 80's baby who was more worried playing on my PlayStation 2 consul landing crazy jumps on ATV Off road Fury and Tony Hawk's latest release.
From the little experience I have as an investor and a finance student, I've been taught that bubbles are created by over speculation of a company that causes the stock price to rise dramatically.
If my speculations are correct, assuming history repeats itself, Morgan Stanley and all of the other underwriters for $FB will so surprised when they see that they miss-price the stock and it ends its first day at, my estimate: $75.
Sound crazy with a potential valuation of over $200 billion at this price? Yes, It's a little crazy but I think it is also very likely. Look at LinkedIn trading at a multiple of 800+ earnings.
According to efficient market hypothesis in all forms; weak, semi, and strong form, information will become or is already available. This should be reflected in the stock price, but then there is "The Greater Fool Theory," that states that buying of securities at an overvalued price is acceptable, because there will always be a greater fool who is willing to buy that security at a higher price.
So, we will wait until next week when Facebook hits the market to see if my hypothesis will come true.
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