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back to article Facebook stock-spaffers officially LOSERS: Stock hits all-time high of $45

Facebook shares rose over three per cent to a new high yesterday, finally breaking past $45 for the first time since its IPOcalypse last year. This means that even those who paid the highest price the shares hit on the first day of trading would no longer be out of pocket if they sold – that is, if they have held on to their …

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How the hell

can anyone seriously think a single website, with some adverts and a few servers, can be worth more than the GDP of hundreds of countries?

Seriously, this values facebook at around the GDP of the Hungary, Bangladesh or Angola. Or half the GDP of Hong Kong or Finland. For one single advertising-based website.

How can any fully grown person look at that and not think it's an epic bubble?

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Re: How the hell

The probably do. It doesn't matter, they just want to find a way to make money. Regardless of what it might be. Unsustainable advertising based business model, child prostitutes, drug smuggling, arms dealing, whatever, it's all just numbers on a spreadsheet, money to be made.

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Re: How the hell

It's a combination of the policy of money-printing (dubbed "quantitative easing" to make it sound better), financial repression with artificially low interest rates and the wealth effect.

Freshly printed, or at least issued, money gets dumped onto a market where interest rates are held low to encourage investment in assets other than government bonds, which you can't buy anyway because the central banks are buying them up. This pushes hot money into speculative assets such as shares, currently even more so as money is returning from emerging markets in anticipation of an end to easy money. The rise in share prices, in much the same way as rising house prices do, makes people feel wealthier, thus more likely to spend money (they don't have, but, hey, at current interest rates it's better to spend it now than watch it depreciate, or if you're in debt snuggle up with the thought that your debts will be worth less tomorrow). It's the economic equivalent of perpetual motion and just as much a myth.

Oh, but don't worry about not getting a piece of the action: your savings bank and pension plan will make sure you do.

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Re: How the hell

Google has been worth $100bn or more since about 2005, it is currently worth $300bn. In 2005 was Google much more than "a single website, with some adverts and a few servers"?

It seems they both will become the central online advertising platforms, one to target people who are looking for something specific (search based ads) and one to target demographics (which is all advertisers have ever wanted to target up to now by focusing on specific TV shows/publications/whatever). If they do end up with this duopoly status then I think they easily justify the valuation.

Imagine if ITV controlled all TV advertising for a channel that had a global audience of 1bn for an hour a day, and where an advertiser could place a different ad in front of each viewer based on their demographic/interests. How much would that be worth?

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Re: How the hell

If you played the timing game and bought when they dropped and held until now, you made a tidy profit.

Of course, if you hold it in the expectation it's going to be the next Apple...

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Re: How the hell

Some adverts and "a few servers"?

FB has the same 'population' as China.

Also your comparison makes no sense... "worth more than the GDP of hundreds of countries". That makes it sound like FB is worth more than those countries, but a country is worth WAAAY more than it's GDP, just as FB's value is far more than it's turnover.

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Anonymous Coward

Short term Hike

Someone has been manipulating or short selling the stock, wouldn't surprise me to find an investor off loading a large amount of shares.

Pop goes the Bubble

Facebook will go the way of the DeLorean DMC-12.

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Re: How the hell

Agreed, it looks like a speculative bubble to me, unless I do not realize the financial value of all the private information Facebook has stolen collected from its users.

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Re: How the hell

"FB has the same 'population' as China"

According to who? FB.

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Re: Short term Hike

Wait, the Delorean was actually pretty nifty. Something that you cannot say about the pile of shit that is facebook.

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The facebook singularity at $1,000,000,000,000

I do not have a horse in this race, but I am not surprised that facebook's value has gone up. I wrote about it here:

http://blog.truebob.com/2012/03/facebook-singularity-at-1000000000000.html

In fact, I think that facebook has mis-stepped a little. This is their game to lose now. They have not even begun to realize the value of what they have.

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Re: The facebook singularity at $1,000,000,000,000

"They have not even begun to realize the value of what they have."

Dear God! Stop that; you're effing scaring me....

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Sellout

Something is worth what buyers are prepared to pay for it.

It seems that Facebook is worth $45 a share. If it stays this high, I will admit that I was wrong in my estimation of its value.

I wonder who will be the next high-profile Facebook executive to cash in, now that the share price is so high.

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Value vs share price

Let's not forget that share price has fuckall to do with inherent value. Much like bitcoins being 'worth' $140-odd, the minute you try to buy a loaf of bread with a fraction of one, its value seems a lot less realistic.

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