I just can't help thinking that we all need to learn the lessons of the recent past.
Remember the DotCom Bubble – you know? – the one that burst? – You do? well, tell me this… how can Mark Zuckerberg realisticy apply a P/E (the ratio of Share Price to Earning) of about 104? (yes, investors would have to wait 104 years to get dividends that equal the price of the company… not good). A more sensible P/E for a software company would be about 15-20.
Anyway… I suspect that the P/E of Facebook shares will be more like 20 within a few weeks… If that is the case, there will be a lot of unhappy investors around the place.
let's see if I am wrong (and I am from time to time!)
(ed) – hmmm…. all those investors are 40% down now…. Wrong? – maybe, maybe not!