Monday, May 21, 2012

Good to know that investors are not blinded

I find it reassuring that investors in the US are aware that the Facebook IPO is severely over-priced. In a business, it doesn't matter how much sales you make. It's the profit/earnings that matters. The fact is that Facebook was priced at 107 price earnings ratio. Why on earth did the underwriters price it as such even though GM has recently announced that they will not continue putting ads at Facebook? Well, the underwriters will pay the price. Good luck in them trying to hold the USD38 price.

107 PER? It smells like the dot com boom all over again. I hope that the results on Friday was not the result of overall market sentiment.

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