Why do people buy FB if its price isn't justified by P/E?
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03-30-2014, 01:56 PM
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Why do people buy FB if its price isn't justified by P/E?
I just read that Facebook reported earnings of $0.19 and last quarter, their results were $0.12. If you add these two numbers, you'd get $0.31. If you can expect them to continue their results, they'd make $0.62. The stock price is now $34.36. This means that, if you buy the share at market price right now, and you can expect the year's results to yield a $0.70 of EPS, then you're paying nearly 50 times earnings for a share. This seems insane. Is this just the speculation Ben Graham talked about?
I'm asking this because I'm a Ben Graham disciple, and he always said that if you paid more that 20 times earnings for a stock, you are speculating. Would that apply in this case, or is Facebook considered a growth stock now that it is expanding its mobile business. I'm sorry if this question sounds stupid. I'm just 14 and I want to test out my understanding of Ben Graham's philosophy. Thanks and sorry for the trouble. Ads |
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Why do people buy FB if its price isn't justified by P/E? - Tom - 03-30-2014 01:56 PM
[] - icpooreman - 03-30-2014, 02:24 PM
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