In the last several weeks we have seen many discussions on whether Facebook’s IPO price of $38 is anywhere close to being reasonable. The +100x P/E multiple seemed crazy and could not be justified by any value investor. Since its IPO Facebook shares have dropped ~%27 but the real question now is where is the stock prices‘ bottom. Many of Facebook’s shares are now held by insiders and are in a lock period of 90 days post IPO. This lock period will soon be over and the market has a strong fear that there would be a huge selloff of the stock by the insiders once the restricted period would be over. Groupon’s shares suffered a ~10% decline this week due to this issue and many analyst are already predicting that Facebook would trade below $20 by then. Now what do you think Facebook is really worth and should the company think about changing their business model? Can the price drop to below $10 such at the following article suggests:
http://www.valuewalk.com/2012/06/facebook-inc-fb-ipo-wall-street-wins-muppets-lose-yet-again/
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