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Wedbush Security analyst Michael Pachter and Scott Kessler of S&P give their outlook for Facebook stock prices.
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So where does FaceBook stop go from here we have to analysts join us now SMP Scott Kessler had a sell rating.
But we're joined first by Michael packer of what bush securities on the phone he sees the stock at 44 dollars -- -- year.
Michael Patrick Packard that's it especially bold call given that it was talking about the FaceBook debacle.
Yeah I think -- debacle is that -- -- to do with the company's fundamentals than it does with the the poor judgment.
That we saw its -- here.
I just topic the market -- prepare to but it took it billion dollars with -- in the day.
I think that the company and the underwriters to this percentage -- -- until you tell your clients Michael the -- -- right now.
I don't think the problem -- -- -- -- like catching a falling knife I mean we we don't know what the market equilibrium is we need because supply demand imbalance.
But it would help my clients it is.
Do their homework and look at my report with the Myanmar -- and the kind of see where this company's going to go.
And then make your own judgment about what when the right time is the step in it to drop another okay -- -- mr.
Kessler.
Tell us why mr.
-- is wrong.
While -- is necessarily wrong to the extent that look I mean FaceBook.
So far has been a great company and seize upon a tremendous opportunity.
The issues that we see here are related to investment risks so you think about things like monetization.
-- mobile.
-- you think about all the investment.
That they're making to expand.
And then you think about issues related to corporate governance and legal and regulatory risks.
We see that those as pretty substantial.
FaceBook is trading at.
Notable premiums to what we characterizes peers even based on our 2013.
Estimates.
And so right now we still think the stock is pretty rich even after it's come down almost 20%.
OK that was Scott Kessler S&P back to -- -- you know.
A lot of people had doubts about Google went public at 85 announce a five or 600 dollars stock how long before we decide yes or no that FaceBook is gonna be like that.
Well first so I think that's right if you valued based because next year's earnings you probably come up with a 25 dollar valuation so.
I think that's a good call I'm looking at a 2015 valuation.
And I think the comparison to Google is actually appropriate.
The risk being -- when that went public what is the that there were -- windows which can cost but it could if -- at being existed at the time with Microsoft multiple and and marketing power.
Maybe -- being would have been Google wants because didn't cost anything as with surgeons -- Based book the switching costs are immense there is no where else you can go and find all your friends.
That they -- anywhere else in the past 11100 friends -- on FaceBook.
A 140 of them on Google+ but it's worth trying OK so let's.
Good day holiday let -- ping -- back to Scott Kessler of -- absentee Scott what would you need to -- in the next six months say for you to change your mind and put a buy rating on FaceBook.
Wow you know I don't know about changing my rating so quickly given that we initiated coverage today but I would want to see the company kind of prove out.
Its business model and monetization.
Approach.
At this point there are tremendous number of unknowns and rather than suggest that people buy in -- What we see is a number of questions.
We think that.
Looking strictly at the fundamentals as we know them now and the current valuation.
We say cell and think they're probably would be better opportunities get involved in the shares.
OK Michael Packard at web bush all of this investigation by NASDAQ -- dropped the SEC congress is now squawking about it.
It's gonna come to nothing isn't.
You know I think Morgan Stanley as a problem if if what people -- Spain is critical.
That the and I think they'll probably end up -- -- -- as if there was the dissemination or -- it wasn't given everybody that very good but.
I don't think that affects -- at all I think they told the underwriters all the same thing and it's not their problem yet writers.
All right deal that but look the big -- and discuss right he's looking at today's revenue and maybe next year's revenue.
There are 900 million users it's -- 4000 minutes a month.
And FaceBook is is monetizing at a rate of about four dollars per user per year right that's number number that number can go to twenty dollars per user per year if they try.
Until that so the big -- -- is will they try.
Are no last questions for Scott Kessler viewing -- -- way too much to be interesting in this thing but if the stock price have FaceBook Scott had indeed doubled.
And the first couple days will we be having this conversation.
And I.
-- -- I guess you guys wanted to have -- on talking about FaceBook but the reality area is pretty simple.
And I think it struck by what your time horizon is in terms of thinking about a company in the stock.
Obviously might you know as I thoughtful approach looking three years out and we're looking you know maybe a year or two out -- the most and I think.
We don't really have any idea what's gonna happen maybe come over that period of time beyond what we're looking.
Unfortunately a lot of -- -- -- next like three or four days when faced over the longer term all right thank you very much Scott Kessler Michael -- Something done for the kids' college fund write an IRA and other.
