Leading article: Liking Facebook, or not liking? Take time to decide

 

Monday 21 May 2012 20:49 EDT
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After the triumphalist scenes at Facebook's headquarters when it floated last week, the company probably deserves the outpouring of derision that accompanied its share price plunge yesterday, which at one point had wiped $15bn off the value of the company ($15bn is equal to about one Yahoo).

The point, though, is that $15bn is a rounding error compared to the riches on offer if Mark Zuckerberg starts to make real money from Facebook's 900 million captive users. It isn't much, either, compared to the losses that shareholders will suffer if he doesn't.

The swings in Facebook's share price do not reflect minor differences of view over the right multiple an investor should pay for its near-term profits; it is a tussle between the optimists and the pessimists, and yesterday the latter had their grip on trading. How much is Facebook worth? It's not a question the share price can answer, and the urge to keep refreshing that page in order to see its price gyrating is definitely to be resisted.

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