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

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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

 

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