Facebook’s $104bn bubble

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Mark Ritson’s column declaring Facebook’s stock market flotation share price to be inflated sparked much debate. Read the article here and read comment excerpts below:

Facebook may well have made a mistake by listing at this time – but only because people might believe your old world logic and that might hurt it in the short term. At just over $100 per subscriber, the valuation seems fair. Absurd of you to suggest its revenue model is restricted to advertising. That’s where WPP is more at home.
Tom Penney

I agree Facebook is over-valued – it should be more like $75bn – but your comparison with WPP is like comparing Facebook with MacDonalds. WPP is an ad agency, Facebook is not – it’s a media vehicle. If you want to compare Facebook accurately on the basis of potential advertising revenues, you need to compare it with the likes of Reed.
Ivor Morgan

Mark Ritson replies: I agree that Facebook is not valueless, just less value than moronic marketers would have us believe. I think Ivor’s estimate is still over the odds and $25bn is about right. Time will tell.

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