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Author: TMFCogitarius Big gold star, 5000 posts Old School Fool Home Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 46837  
Subject: Re: Prof. Damodaran's Facebook valuation Date: 5/17/2012 11:33 AM
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Thanks Grommet - glad you found it useful!

Hope you also read his latest update?

"Bottom line:

Revisiting the valuation, there is not a great deal I would change as a result of news over the last few weeks: a higher revenue growth rate (45% compounded with revenues growing to $ 56 billion) accompanied by lower margins (30%) and more reinvestment ($1.25 of revenues for every dollar invested) delivers an estimate of value that stays at the $70-$80 billion range.

I don't think that there has ever been an IPO where investment bankers have had more information (from private share market prices to institutional investor feedback) to work with, when pricing the stock, than this one. I would be very surprised, if the stock were overpriced; the bankers and the company have too much too lose. I would be equally surprised if the stock were dramatically under priced; a pop of 50% or even 25% would reflect very badly on the bankers' pricing skills. In short, this is shaping up to be a Goldilocks IPO, at least in the initial hours: a pop of about 10-15% (just right for both the bankers and the company). The question is how long the pop will last. This company is too big and too public to stage manage in the weeks after the IPO. If the pop fades quickly, perhaps even by the end of trading tomorrow, I think it is a very bad sign for the momentum game in all social media stocks.

I think that the hype is overdone, that disappointment will set in sooner or later and that the stock has far more downside than upside. You can put me in the last group (long term sell) though I am still searching for the most efficient (and least costly) way to execute this."
http://aswathdamodaran.blogspot.com/2012/05/facebook-hoodies...

Always good to find a thimbleful of rationality floating in the torrent of Kool Aid :)
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GG/MDP Home Fool
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