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su sBy Keith Fitz-Gerald, ,
Double duh if you're thinking of buying Facebook stock now that it's fallen to $32 a share and lost $17.16 billion off its initial $104 billion valuation.
The company is only worth about $7.50 a share. And, no. That's not a typo. There is no missing zero or a placeholder.
That's reality. What is ludicrous is that Morgan Stanley and Facebook executives thought the company merited a $104 billion valuation at 100 times earnings.
As my good friend Barry Ritholtz pointed out recently, both Apple (Nasdaq: AAPL) and (Nasdaq: GOOG) debuted at about 15 times earnings. Today they trade at 13.6 and 18.2 times earnings and 3.75 and 4.9 times sales respectively.
As I type, Facebook's market cap is $86.84 billion and its price to sales is ridiculously high at 21.01. I think that's way out of line.
So what should the numbers be?
Try this on for size. If we use 's price to sales ratio of 4.9 (and I am being generous here for discussion purposes), that equals a total market cap of $20.24 billion or 76.68% lower than where it's trading today.
With 2.74 billion shares outstanding, that's equal to only $7.39-$7.50 per share.
No doubt I'll get the evil eye from the Facebook faithful and Morgan Stanley for saying this, but think about it.
Revenue is already slowing and the company does not and cannot possibly dominate the mobile markets that are becoming the preferred channel for millions of people.
Worse, startups are already cannibalizing Facebook's user base as concerns over privacy and who likes who mount.
Companies like General Motors (NYSE: GM) are deciding not to renew their advertising. This is going to hit Facebook to the tune of $10 million a year for the loss of GM alone.
More will undoubtedly head out the door for the same reason, since Facebook friends don't necessarily translate into revenue.
Corporate buyers are beginning to figure out that advertising on Facebook is simply not cost effective versus other media alternatives – gasp – including good old fashioned television and radio advertising, billboards and tradeshows.
Many people think this isn't a big deal. They couldn't be more wrong.
By G.S. Early, Contributing Writer
Smile…. you're on the 21st century's version of Candid Camera.
Whether you're an Islamic troublemaker in North Waziristan, a rowdy football fan, or a hopeful immigrant trying to slip across the border, the eye in the sky sees everything.
In the halls of power, there's a term for this. It's called the surveillance society. And it is one of the biggest trends inside and outside the military industrial complex.
Also known as ISR – intelligence, surveillance and reconnaissance-it's an outgrowth of more than a decade of war in Iraq and Afghanistan. It's a place where everyone has heard of unmanned aerial vehicles or UAVs.
But while UAVs are an amazing technology in themselves, they aren't very effective unless they can report on what they see -that's the ISR piece of the puzzle.
And that's precisely where a company like FLIR Systems Inc. (Nasdaq: FLIR) comes in. FLIR provides the optics and equipment to make it all happen both in the air and on the ground.
Founded in 1978, FLIR has developed a reputation for building world-class equipment.
And now that these systems have proven themselves in some of the harshest conditions on Earth, the company is expanding to a broad number of other applications in market sectors outside the military.
However, looking at FLIR's chart, it's an understatement to say that this specialty defense imaging stock has been hit hard by the budget cuts and the winding down of our presence in Iraq and Afghanistan.
By Don Miller, ,
Could new sanctions against Iran spark a crisis that drives oil prices to $200 a barrel?
The leaders of the Group of Eight (G8) economies certainly hope not.
Even still, they recently unveiled plans to tap into global emergency strategic oil reserves — just in case.
Citing their "grave concern" over Iran's nuclear program and the "likelihood of further disruptions in oil sales" G8 leaders put the International Energy Agency (IEA) on standby to tap the reserves at a moment's notice.
"Looking ahead we…stand ready to call upon the IEA to take appropriate action to ensure that the market is fully and timely supplied," said the statement summing up their meeting last weekend.
But the G8 may just be trying to calm the markets before the storm. History shows that tapping into the reserves won't do much to prevent higher prices.
And there's no reason to believe this time will be any different.