By Gerry Shih
SAN FRANCISCO, Sept 24 Facebook (FB.O) shares
dropped on Monday after financial weekly Barron's questioned the
social networking company's value and priced its stock at just
Facebook's shares slid 10 percent to $20.64 in mid-day trade
on Nasdaq, about 46 percent off of its $38 IPO price in May. The
decline shed most of its gains from the previous week, when
shares were boosted by news that the company was testing a new
mobile advertising network.
"Is the stock a buy? The short answer is 'No,'" Andrew Bary
wrote in the latest edition of Barron's over the weekend. "The
stock trades at high multiples of both sales and earnings, even
as uncertainty about the outlook for its business grows."
At $15, Facebook would still be richly valued at 24 times
its projected 2013 profit. That's compared to established tech
giants Apple (AAPL.O) and Google (GOOG.O), which both now trade
for about 16 times their 2012 earnings, Barron's argued.
Aside from the No. 1 social network's struggle to adapt to
the rise of mobile devices, Barron's also highlighted Facebook's
stock compensation costs, which have ballooned as the company
fights to hold onto its employees by dangling more shares.
Barron's estimated that Facebook's restricted-stock issues
were "so large last year that it may have exceeded its cash
"CEO Mark Zuckerberg seems to have a cavalier attitude"
about stock compensation, Barron's wrote, because of the
company's policy of granting more shares to employees to make up
for its declining stock price.
(Reporting By Gerry Shih; Editing by Bernard Orr)
Keywords: FACEBOOK BARRONS/
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