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Facebook’s IPO Significantly Overpriced?

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  • Description

    Sageworks CEO Brian Hamilton on why the price range for Facebook’s IPO is too high.

  • Duration 3:46
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This transcript is automatically generated

-- XP -- over the tell the hottest -- into.

On the basement roadshow but some investors -- them did -- the -- and next guest says based on valuation is significantly overpriced.

Dynamics in CEO of -- ricks joins us now significantly overpriced Bryant.

Some historical prospective yeah Microsoft -- out there were five times sales.

Of Google if you value them now a FaceBook comparable would -- over two trillion dollars in valuation.

So FaceBook is 2.5 times sales in their current valuation it's really unprecedented so it's not that accompanies a good company -- -- -- sales.

But you know you're buying a high price stock.

And big issues revenue whereas the revenue gonna growth gonna come from we know that the mobile situation is being very -- -- been very slow to react to Smartphones and people using face become and no doubt about but remember when we go public with the company we want both entrepreneur orders fear and on the investors to win both in the -- to come together so what's happening right now because of the valuation is really the entrepreneurship of the founders.

Are mostly winning it's not the same by the way that I won't -- a year and a price will be higher but if you -- -- right now you're buying a richly priced stock there's no question.

We're we're hearing a lot of stories on one hand -- -- -- oversubscribed and the other handlers we're hearing weaker forecast.

Shibani Joshi reporting that insiders are selling this thing already -- what are you hearing as far as the interest.

Here's what they did it was Smart they are basically no offering a ton of stock they're keeping the supply low -- they're hoping the demand will be very high sort of push the price up.

But what we're concerned about is what happens in about six -- for twelve months from now.

So remember you look at these big brand companies they -- or space it's terrific but the value is really high there's no doubt about it.

So the value -- well based on everybody uses it and that surely the potential is there to tap into that.

The problem is they just haven't found a very good way yet right well they're doing well the sales are going up in remember when you look at tech companies you've got to compare relatively -- there's they have sales for one thing that's terrific right.

They've got some marginal profitability there you can also profits there.

But really.

Look at comparable companies and remember Microsoft -- -- lives up a little bit 1986 go public right.

And they own the entire software space and no doubt the whole thing right and we -- is FaceBook fundamentally much stronger than Microsoft or over other comparable company.

But you can say this is not.

Really -- IPO as it's more like got socialization IPO or an IPO in the communications Specter and it you know I think -- America -- Zone well look that's the clean they're making to remember when we buy stocks we've got to look -- what they've done.

What's happening here is they're looking at what we might do in your point's well taken actually.

We'll get their market penetration yeah there's only one planet earth right right seals can't gold forever -- -- a market include or something we don't know about.

So if you're an investor we want the value to be good.

It doesn't it can be a little bit over their price her life 68 maybe ten times -- but they're at.

Probably be between twenty -- 25 times sales so -- not getting a bargain.

And is there -- concerned with their filings that they continue to change.

Yes you know -- -- -- measurements and that's got to be a concern as well no doubt about it no doubt about so.

Here's what's going on if you're -- user FaceBook IE everybody right.

It does it mean you're a buyer face but he really got them you'll get caught the market momentum -- what's going on would get other comparable companies historically for the last hundred years.

US steel -- brands all these great companies.

This valuation is really unprecedented boom it doesn't mean it's not a good company it just means no you're buying.

Right because reset their earnings only achieved 5000.

It's like treating like five and a time do we look at profits and I think I'm gonna happen that -- -- Euro great stuff Brian thank you.

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