Not really. Look at Amazon's PE, keeping strong since years and much higher than Facebook's. If there is really a huge growth potential and a good track of growth for many years, a high PE can be justified. Of course, the future will tell us who was right...

Amazon is often brought up in PE discussions, but as far as FB is concerned it's apples and oranges when you compare the business inputs and outputs of each.

Could you please expand on that?

I can try. Amazon sells physical products, while Facebook sells eyeballs to advertisers. This is how both businesses are setup to make money, at least at the days of IPO. While with Amazon you use it because you want a product, with Facebook you do not want to be plastered with Ads, but you have no choice.

Amazon is a solid horse with no "kill me" obstacles on its way. Sure in 150 years you will have a machine a size of your fridge and you download blueprint from internet and the product is being 3d-printed for you, but since we not there just yet everyone needs products that Amazon offers and shift is towards selling stuff online. Mobile movement is to Amazon irrelevant while it may kill Facebook.

That's for start.

> machine a size of your fridge and you download blueprint from internet

So, you are saying that in the future, Amazon will manufacture and sell blue prints and 3D printers? :-)

Better that than pushing legislation to ban 3d printers because they can infringe on copyrights

Agree for the most part.. though 20 years and the size of a toaster oven is probably more accurate.

As long as anything you plan to render is the size of a breadbox or smaller.

Diamond Age. Or Makers (Stephenson and Doctorow, respectively).

+1. Uncle Wiki says it must be an amazing book (that I've never heard of). Thanks for pointing out!

http://en.wikipedia.org/wiki/The_Diamond_Age

If you look at the studies that were done about high PE firms you will see that those firms were not attempting to secure the maximum valuation possible @ IPO. In FB's case they were attempting to secure a $100 billion valuation (the maximum valuation that any stock prognosticator had called for.) I also do not believe high PE studies go further back than the 1990's. There is something there, but more data is needed.

> All you had to do is read their P/E at the IPO.

No, this is wrong. Earnings are almost totally irrelevant at this stage. Companies raise money through an IPO because they are in growth mode which typically means minimal or negative earnings.