Thursday, May 3, 2012

How Do You Value A Company...

This has been the $11.8 Billion $64,000 question ever since it came out that Facebook would be making its initial public offering of stock.

Granted, I use Facebook a bit, but it has no tangible assets; people will be paying a huge chunk of money for what is essentially programming rights. If Facebook fails (and history suggests that it will eventually), then shareholders will have to eat their own savings on this; there will be nothing on which to fall back.  It is just an inherently shaky investment.  The key will be knowing when to get out.

When it collapses, it will make the 90's tech burst look like child's play.

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