Facebook (NASDAQ:FB) is currently trading at $46.70, with a P/E ratio of nearly a hundred, meaning that it’ll take Facebook a hundred years to pay back investors based on its current earnings, assuming, of course, the current earnings are sustained.
Reports earlier this month have suggested that teens are leaving Facebook in droves. In fact, Facebook lost 16% of American teenagers in just one quarter, Forbes suggests. 16% in one quarter! Imagine that!
Not only is Facebook losing teenagers, it is also losing adults. I am currently 35, and I have totally stopped using Facebook back in August of this year (that was nearly 4 months ago) and I don’t miss it a bit, and I’m not alone, and I’m not just saying this because I want Facebook to do bad in the stock market, it’s a fact, Facebook is losing traffic, substantial traffic every month, and there’s nothing that the Facebook management can do to stop the hemorrhage (by the way, even Facebook executives admit there is huge hemorrhage), except to pretend that it’s not affecting their quarterly results.
I don’t think investors can remain oblivious about Facebook’s traffic for long – sooner, rather than later, Facebook will be punished, and the stock will burst and most likely it’ll be reduced to a single digit stock. Who knows, maybe that’ll happen in the next quarter.
And when Facebook falls, LinkedIn will follow. Or maybe LinkedIn (trading at a P/E of nearly a 1,000) will fall first. Who knows?
I’m sure that many people will still buy FBs and LNKDs, but hey, there’s a sucker born every single minute (well, nowadays there’s a sucker born nearly every 9 seconds, since that saying was first used back in the 1800′s when the world population was only 1 billion, and now it’s 7 billion, so, the number of seconds it takes for a sucker to be born is (60 x 1)/7 = 8.5 seconds).
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