Can anyone explain this whole Facebook share stuff?

[John Ashtone]

Selling shares is a cheap way of raising money.

In the case of Facebook $16 billion, this is now ca$h in their coffers, having sold the tranche of shares at $38 each, from now on whatever happens to the share price has no affect on Facebook.

The total revenues (the money it earns each year) is currently $1 Billion, which is nothing very special at all (hundreds of British Companies have a larger turnover, and thousands of other US companies likewise), but the company made a loss last year, and it is difficult to see that Facebook can increase its advertising by 5 of 10 fold, and even if it did, and made say $2 billion profits, this would put the shares at 15 PE (a term used for shares) at around $5.50

I joked at the time that 38 cents was their worth, I am now saying more seriously October November, for $3.80 to $5.50 after all they have $16 billion in cash.

The price people are paying now is the price people think they might be worth.

Not a lot is the answer.