During May 2012 Facebook entered the Nasdaq by pricing its IPO at $38 per share. At the end of July 2012 Facebook share was traded at about $30, and today it is traded between $19 and $20. But why did Facebook share crashed like that? Is it because Goldman Sachs and other Institutional investors are selling their shares? No, the real reason for a 50% stock slump is based always upon fundamental factors. At the end of July Facebook reported a growth slowdown without even easing worries about future reports. But let's see some important fundamental figures about Facebook.
Some Important Facebook Figures
∟ Total Revenue and Net Income: Sales 4,33 billion USD, EBITA=1.07 billion USD and net income about 0.77 billion USD.
∟ Important Ratios, Price / Sales=9.3, Trailing P/E=67.06, Forward P/E=30.76, Price/Book=3.12
∟ Cash and Debt: Cash 10.2 billion USD and debt 0.7 billion USD
∟ Facebook Market Capitalization: 41.52 billion USD (in a Facebook share price of about $19.70)
(source: Yahoo Finance)
Facebook reminds us of the story of the .coms shares in the late '90s. High expectations and weak fundamentals sooner or later are forming great bubbles. So the Facebook bubble eventually has crashed. This means bad news for Facebook existing Investors but maybe it means a trading opportunity for the rest.
The 3rd Largest IPO in US history
Facebook's IPO raised $16 billion, and it was the 3d largest IPO in US history. The largest US IPO raised $19.7 billion (VISA) in 2008, and the second largest US IPO raised $18.1 billion (automaker General Motors) in 2010.