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Facebook Expands IPO to 421.2M Shares

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  • Description

    Chapwood Investments' Ed Butowsky breaks down Facebook’s IPO and future earnings potential.

  • Duration 2:02
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This transcript is automatically generated

But I think if it.

It everybody's waiting for the FaceBook IPO it happens Friday morning that's even though GN the General Motors made a very public announcement yesterday that is pulling its ads from the social network in fact.

Demand for Facebook's jazz is going off.

They've just raised the number -- that they offer his -- -- -- street money manager for the rest of -- -- -- chop -- investments.

I am and -- would you be buying this stock on I you probably can't get into the oh IPO price but what you bought on the first day.

What -- that the world.

Up -- sort of kind of -- the conversation.

A stock should sell.

At its price earnings ratio should be equal to or close to the growth rate.

All of the company that's a general rule of -- this company is coming public at a 99 PE if it's priced towards the mid range -- the high end okay.

That means FaceBook to justify that would have to be growing at about a -- percent a year.

And I don't know that's gonna do that its growth rate has actually slowed it's a huge company everybody wants it but what I'd buy it today.

No mean.

OK but there's enormous buzz about this thing that's right another class shoes well a little guys for the small investors -- managing a lot of money now I understand that couldn't.

But taxi drivers and I told two people on the street they say hey how can I get into FaceBook they want to -- they think it's gonna be another Google I think is going to be another Microsoft that's what they think.

Well that there's no way of knowing that and.

And if you have a company that's being priced at a hundred times media that it has the double next year to justify that price and if the forecast right now are for about a 60% growth anybody who wants to buy it right now is just misinformed and they're getting caught up with the PR because they understand FaceBook FaceBook but they don't understand the valuation they know how peaceful works.

But the only way you'll be justified in the one way I would buy it isn't someone told me they -- gonna put a five dollar month charged.

Up for every customer with 900 million customers Beckham got to be five point four billion dollars to the bottom line that the only way that I would go buy that stock at.

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