Wealth Strategies: Facebook should be a $50 billion company
Tuesday, May 29, 2012 - 04:25
May 29 - Wells Fargo's Walter Price says a fair valuation for Facebook would be $50 billion and that he wouldn't consider buying shares unless they fell below $20.
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For the retail investor looking for a big pop in Facebook's stock it's not PO with disappointment for his thoughts on -- price portfolio manager at Wells Fargo advantage. Specialized technology. -- About the IPO before we get too deep here. That lied and FaceBook stocks that thought it was gonna make it difficult to attract. Retail investors either to future IPOs or the tech sector in general. I do Rhonda I think that the FaceBook IPO kind of marks a peak of recent IPOs. I think the effective. With FaceBook. Decline in the stock on the aftermath. Is gonna put a damper on IPOs for -- several quarters. And you have mentioned to me earlier you would consider buying FaceBook but the stock has to go lower still. Audio we think that Facebook's on the transition. In their business model. I think it was easy to get the first five or 10% of an advertising budget to two a trial on FaceBook and to. Do some -- brand advertising on FaceBook but getting the next five or 10% you've got to displaced TV. And that's a lot more difficult to do because of Facebook's told us and how about the metrics to -- profitability and proof. Growth and awareness from their platforms so I think they have to build out that capability and that's this transition Facebook's going through. Where do you think it is a compelling value at what price. -- been talking about a fifty billion dollar valuation is one that makes cents and I think that. That would be that that would be a stock price around twenty dollars at that point I think that the infrastructure that FaceBook is building and he. The fact that they have many advertisers that that have built followers and fans are on their platform. Gives them a base to build a great business tonight and I think they will but. In the meantime. Where were standing back from star. Other social media stocks really think that sector get pummeled again it FaceBook sold off. Are some of those stocks overvalued urge you think they're just being tarnished here. I think they're being tarnished. I think they were brought out. As though they were brought out at full price slow. You know we wanted to buy it linked in for example in immediately the stock price so you know within the first hour -- tour. Our target price and so we couldn't buy about -- we have to wait for the stock to pull back. And decline but we do on Linkedin today. Group -- other stocks that have a lot of enthusiastic about it and you know we didn't buy that stock until it declines significantly but those are two -- that we think are real companies and are building real businesses and we've started to build some small positions. We have certainly seen a lot of interest in opera odd word that FaceBook might get into war with Google if you well. So by that company are you keeping watch for some of these smaller software companies -- -- A potential that some of these social media names. Might heat up albeit small but it might heat up everyday activity and in some of these smaller tech stocks. On -- day activities and it's been continuing and the software industry affects. What you're saying as the big companies are transitioning their models in two. More -- cloud based software and their four. You're seeing them by companies because it's very difficult to move their business. As as fast as they like to we have we got a company last week it was bought or Reba. I would just been a stock we've known for a couple years and it was bought by recipe for example last week they needed to get. Of a stronger cloud offering and I think the same thing applies to social media companies they need to move to mobile and they need to move quickly. So they're buying companies to get there. Both -- Walter price thanks so much. Q I'm Rhonda schaffler this is Reuters.
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