Isn't a more normal P/E ratio like 20 or so? Why the hell do people have this much confidence in Facebook's ability to be more profitable in the future?
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"The poor performance of the Facebook deal demonstrates a couple things. Be wary of leaked word from underwriters before pricing that IPOs are hugely oversubscribed. Most institutional investors are greedy and want hot deals not because they love the companies but because they want to make money. If the deals fizzle, they head quickly for the exits to limit their losses.
It appears that the underwriters were overly aggressive in pricing the Facebook deal. Not only was the deal size increased to 421 million shares from 337 million shares, a 25% increase, but the price was set at $38, above the original range of $28 to $35. The underwriters bought into the hype and investors paid the price. Winners include Facebook, CEO Mark Zuckerberg and other selling shareholders who netted $38 a share for their holdings sold in the IPO."
New documents show that federal regulators wanted to know more about Facebook's mobile users and the company's relationship with Zynga before Facebook's initial public offering of stock.
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