By MICHAEL SANTOLI
Three issues leap out to me from that paragraph:
1) Tight float: The trick we have seen already is to only sell a small amount of stock to the public between 5-15%. It take very little public buying to send that stock soaring. These companies are “Semi Public;” put the other 80-95% on the market, and see how much interest — and valuation there actually is.
2) Second Markets: The $65, $75, or $100 billion valuation for Facebook comes via the exchange of shares on a very small, uninformed, opaque market. No public disclosures required, no transparent pricing, just blind fumbling. I have yet to see any evidence that these markets come anywhere near pricing equities accurately.
3)Facebook: Assuming the data is correct, Facebook trades at 100 times revenue. Not earnings, revenue. Unless you expect their profit growth to be historically unprecedented, its hard to see how that $100B ism not terribly expensive.
All of the above are interesting, but not telling as to what is or isn’t a bubble. 8 Stocks do not typically make for a frenzy . . .
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