This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Jim Cramer on Facebook's Pricing

NEW YORK ( Real Money) -- We want things to be compliant with Facebook (FB - Get Report). That means we need to see oil stabilize, which it can, since the Cushing, Okla., oil glut is being alleviated by the Seaway pipeline. We need to see Europe stabilize, which it can, given that every short is worried about something good happening this weekend. We need to see gold rise, which is what happens each time the Germans give in to some growth initiative that could be considered inflationary.

We also need to see earnings be smooth -- and the last major company that talked was Salesforce.com (CRM) with a 38% revenue growth rate, astounding for a multi-billion-dollar company. Plus, Salesforce CEO Mark Benioff confirmed to me that Europe was a major positive because of some huge contract wins, including with Vodafone (VOD).

So we have a decent backdrop, for certain.

But we also need to see the frenzy die down -- and that, well, that's not going to happen.

So if we balance the über-exuberance of Facebook with the über-depression of an oversold stock market, maybe -- just maybe -- we'll get a decent day. Of course, that sure hasn't been the case on many Europe-dominated Fridays.

Now, as for the parameters on Facebook: Many institutions are trying to get full positions on the deal. My understanding is that a lot of the buy guys got one-third of a position. There are those who want to be weighted for a big $100 billion-plus company who believe in the $2 earnings-per-share number for 2015, and they would be more than thrilled to pay roughly a 25x multiple -- higher than Google (GOOG), lower than Salesforce.com. So I wouldn't be surprised, despite all the flipping and all of the stock supply, if we saw institutions paying up to $50.

If the price goes north of $50, I think they'll back away and that retail investors will control the opening. South of $50 and I bet you'll see some buying for a decently blended average. It would mean they didn't ratchet things up in price at the last minute, and that would be good news. It would eliminate institutions from saying, "It was high at the road show -- now it is ridiculous."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs