They found it, and it's still not too late to get a piece of the action.
STEER CLEAR OF THE HYPE
By BERNARD CONDONAP Business Writer NEW YORK â¿¿ First, forget the numbers and go with your gut: Given the breathless press coverage, the ubiquity of its product, the Oscar-winning film about its unlikely success and the rock-star status of its 28-year-old founder, do you really believe the smart folks on Wall Street coming up with a stock price for Facebook resisted the temptation to wring every cent out of buyers? In investing, hype is the enemy. I was skeptical from the start. The company listed a range of possible prices for its initial public offering of stock, then raised it, then told us that insiders and early investors would be selling even more of their shares in the offering than they had planned. Now I'm convinced: Don't touch this stock. The banks helping take Facebook public want us to value this 8-year-old upstart at $104 billion, more than Disney or Kraft Foods, though those companies earn three and four times more. That top valuation is also more than 100 times Facebook's earnings last year, versus 13 times for the average company. At such a high price, it will take years for this so-called earnings multiple to fall to a more reasonable level, and that's assuming the company can maintain its torrid earnings growth. To make money in Facebook, you're betting that other buyers will be just as willing as you to hold their nose at the valuation, and keep doing so for years. Facebook grew its earnings 65 percent last year, faster than at most companies, so you should pay more for it than you would the typical company. But how much more? Profits at Apple grew 85 percent last year. Its stock is trading at 13 times earnings per share.