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FB analysis for this year.

September 18, 2012
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The most important thing for FB being a new company, as far as share price is concerned, is to work hard and find ways to earn more money. FB current earning estimate for the year is 5 billion $. FB needs 8 billion $ for next year to stay on track. Let’s see: Earning estimate for next year is 6.3 billion $, a 28% improvement. If FB earns another 28% the year after, its earning would be 8,06 billion $, right on track. But these are only earning estimates although calculated by sophisticated professionals. Let’s see if we can inject more certainty into these numbers. One of the best comparisons to make is with the S&P. This year FB beats the S&P by 5.6%, not bad for a new company. Next year FB is projected to beat the S&P by a respectable ( whopping?) 15.3%, pretty good for a new company. PEG ratio of 1.6 is also respectable (read my books if you don’t know the real meaning of these symbols). The only negative right now is a PE ratio of 45, which is bound to make a nice slide down as earning increase. Here is the clincher. PE will actually not go down because the release of 2 billion FB shares by May next year will prevent the PE from sliding. What will slide is the price of an FB share, may even go down to $15 for a while soon. That is when I show up in $$$ force. I am already on the bandwagon. By the way, all my public analyses of FB in the past and in the future are strictly for educational purposes, absolutely not to be followed by idiots who think they can make money without learning the ropes. These are people who are waiting for a break in life without going to college. I know, I am tough on half of humanity but it’s because I care a lot!

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