Facebook IPO: Four More Reasons (and Counting) to Avoid It

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  1. ady says:

    I think you are taking fundamental analysis too literal. If a companies expenses increase by 98%, a 45% increase in earnings is good if you transpose that in money. If the increase in earnings exceeds the increase in expenses by 1$, that increase in expenses was worth it. And also, this company is so big that the increase has to slow down, but the funds they get from the IPO will help them expand in other markets. This is a very valuable company because it will still be market leader for at least the next 4-5 years until the new thing comes along, or maybe Google+ or other competitor will take the lead, but that is pretty far into the future. All Facebook can do now to speed up their increase is in the number of daily visits, and not in the number of account holders, or maybe increase earnings by optimizing advertising display. I think that Facebook will increase their share price 2-3 times before the end of the year. Linkedin grew around 2.5 times in the first day. Do you think Facebook will not be profitable at least in the first few months of trading?


    Tim Reply:

    I believe you have to read more accurately. The earnings did not increase 45%. Revenue did. Earnings declined.


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