Facebook Shares Worth at least $1000
The decade's most exciting IPO is underway and this might prove to be the biggest investing opportunity in our lifetime. Per our relative valuation model, it's clear that Facebook stock is currently grossly undervalued. Here's why:
Facebook users represent a cross-section of the planet in pretty much the same way that the Chinese population does i.e. a small percentage of high networth individuals, a growing middle class and a still vast percentage of low-income families.
China has a GDP of about $6Trillion with a population of roughly 1.5B. Facebook has about 750M users rouglhy half the population of China. If the China GDP and potential is a proxy for that of Facebook, this means that Facebook is worth at least half the GDP of China i.e. $3Trillion.
With 3 Billion shares outstanding including the 421 Million that will be issued at IPO, Facebook's imputed Price per Share = $3Trillion/3Billion shares = $1,000.
At $35-$38, you have a 27X upside to $1,000. How do you say "bargain of the century"?
Head of Research