Think Different: The Company Growing Faster Than Facebook
Forbes - How should investors value growth?With Facebook now in registration for an initial public offering, the question is top of mind for investors in technology stocks. Facebook generated $3.7 billion in revenue in 2011, and a cool $1 billion in net income. If the conventional wisdom is right, and Facebook goes public with a $100 billion market cap, that makes the math easy – the company would have a P/E of 100x trailing earnings, or if you prefer, 27x trailing revenues.
But not everyone is convinced that Facebook, astonishing as it with close to 850 million users and a rapidly growing revenue base, has done enough to be worth more than, say, Boeing ($57 billion market cap, $69 billion in revenue, $4 billion in profits), Disney ($72 billion market cap, FY September 2011 revenues of $40.9 billion and $4.8 billion in profits) or Hewlett-Packard ($58 billion market cap, FY October 2011 revenues of $127.2 billion, non-GAAP net income of $10.4 billion.)
Indeed, here’s a little conundrum for you.
While Facebook grew revenues 88% in 2011, the company actually grew a more modest 54.7% in the fourth quarter; advertising in the quarter was up 44%. On a sequential basis, revenue was up 18.5% in the fourth quarter from Q1, with advertising revenue up 18.2%; compare that with a year ago when Q4 revenues were up 56.5% sequentially, and ad revenue was up 45.6%. Succumbing to the law of large numbers already?
Now let’s do a little comparison with another well-known tech company, this one based in Cupertino, rather than Menlo Park. More
