NEW YORK ( TheStreet) -- Facebook's (FB - Get Report) 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 - Get Report) 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.