Facebook (NASDAQ:FB) Overvaluation


Dallas, Texas 01/17/2014 (FINANCIALSTRENDS) – Facebook (NASDAQ:FB) now has another type of issue it has to address on the stock markets, even as  it comes to terms with the rehashed theories of its dwindling teen user segment. The market-related question of over valuation is not related just this social networking major but to similar technology companies.

Typically valuation of company’s are based on tangible and non-tangible collateral, assets and funds and potential earnings versus expenditure, if a thumb rule is to be applied. However, the Information Technology social networking platform companies, which are impressive in their line-up – Facebook (NASDAQ:FB), Twitter, LinkedIn, now SnapChat, Tumblr and others lack the traditional valuation parameters in some of the categories.

Facebook (NASDAQ:FB) revenues are currently riding on its advertisements as are other social network earning capabilities. At the same time, all of these platform players are eating a piece of the advertising pie, bringing down the margins between the market leader as well as the minnows. No marketing service provider is willing to take the risk of not being on most of the platforms, even if of smaller value.

The question of internet Utility driving valuations

Facebook (NASDAQ:FB) as are other companies in its category are struggling with the new round of assessments on the utilitarian factor. As research firms gauge the end viability of a social network, analysts and investors are rethinking if Facebook (NASDAQ:FB) at 19 times the valuation a good investment.

Ever since the results of the user profile survey have been realized, the post-analysis of this critical data have near upset the leader board on a few segments. Facebook remained the most visited by US-based users. However, the apparent cause of worry is the drop in teenage users on Facebook. On a lighter note, it has been found that the teen community would be no where near Facebook because this was where their parents hung-out. Therefore, they need a platform which will remain theirs and they would not have to be worried about parental viewership of their escapades.

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