Market Overview

Mega-Hedge Fund Manager: Facebook's Stock Price 'Hardly Represents Any Sort Of Value'

Share:

Speaking exclusively to Benzinga, Lemelson Capital Management’s Chief Investment Officer, Emmanuel Lemelson, provided some insight on the negative sentiment from Facebook Inc (NASDAQ: FB) users and the current stock price, which “hardly represents any sort of value,” he stated.

Lemelson said “it is extremely difficult to justify the current price of Facebook (about $215 billion) based on its financial showing -- TTM levered free cash flow of just $3.34 billion and $2.75 billion of Net Income.

"Further, the assets buttressing the issue offer very little margin of safety to the common equity holder (i.e. NCAV value of just $5.05 per share and tangible book of just $6.64 per share)," he added.

Related Link: How 3 Experts Are Prepping For FB Earnings

Taking a closer look at valuation, the hedge fund manager points out the Price-to-tangible-book ratio of 11.4x, Price-to-earnings of 73x, and price to Free Cash Flow of “a whopping 61x.”

“I don’t know what the earnings might be, because I don’t really follow the issue. However, I have noticed that overwhelmingly FB users (unlike Apple Inc. (NASDAQ: AAPL) users) have increasingly negative feelings about using the product.

"And many ultimately defect, commenting how much better they feel once they do,” he said.

Lemelson concluded with the question: “How could such an emotive phenomenon amongst users ever lead to positive long-term economics?”

Javier Hasse and Brianna Valleskey contributed to this report.

Posted-In: Emmanuel Lemelson Lemelson Capital ManagementAnalyst Color Previews Exclusives Tech Trading Ideas Interview

 

Related Articles (AAPL + FB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MUCascendReiterates65.0
ALDRCanaccord GenuityDowngrades20.0
LEGHLake StreetInitiates Coverage On21.0
CHUGoldman SachsUpgrades13.2
STZBMO CapitalMaintains230.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Lean Hogs Higher

Expert: Alibaba's Jack Ma Won't Pick A Fight With Jeff Bezos