NEW YORK ( TheStreet) -- Facebook's (FB) IPO has been nothing short of a disaster. A falling share price and accusations of improper disclosures have raised serious questions, but one analyst thinks Facebook will be all right in the end.
Needham analyst Laura Martin initiated coverage on the social networking giant with a $40 price target and rates the shares "buy," calling the company "an option on the world."
Much has been made of Facebook's scale. It has over 900 million users, more than half of whom access the site through mobile devices. More than 500 million are daily users. In its most recent quarter, the company generated $1.06 billion in revenue.
Martin says Facebook's revenue-generating ability is only just starting. The company deserves a premium to Google (GOOG) because "the risk an investor takes in buying FB is lower than Google's at its IPO date."The average time spent on Facebook is 14 minutes per share, nearly three times that of Google.com, Martin wrote in her research report. "In terms of value, investors are buying FB at half the valuation of Google, but getting three times the minutes spent. In fact, the single Facebook.com site accounted for 14.6% of all time spent online, while all Google sites (including YouTube) were second at 10.8%, and all Yahoo! (YHOO) sites were third at 8.6%," Martin wrote in her research report.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV