Three months ago
was a cautionary tale. Now it's one of the fastest rising stocks
on the market.
Shares of the social network have more than doubled in the
last three months, sparked by a late-July earnings report that
beat Wall Street estimates and revealed the company's growing
mobile advertising presence.
Prior to that report, Facebook shares were trading at $26.50 -
30% below their $38
when the stock debuted in May 2012. This morning they opened
above $50 for the first time ever.
How high can Facebook go? The P/E suggests it's extremely
overcooked. The stock currently trades at 223 times trailing
earnings. Even the forward P/E is high, at 52.
But social media stocks are notorious for their high
, which is essentially Facebook for the professional world, is
trading at a preposterous 952 times earnings. That's nothing new.
Its P/E has been in the stratosphere for years. And yet the stock
continues to rise higher, doubling in the last year and rising
213% in the last two years.
LinkedIn is proof that ridiculous valuations aren't roadblocks
to continued share price appreciation - at least not when it
comes to social media stocks. That's why at least one analyst
among the 35 listed on Yahoo! Finance has a target price of $60.
Most, however, think the stock's already overcooked.
The average price target is $46.28, or 7% below its current
But if Facebook beats third-quarter earnings estimates by 36%
the way it did last quarter, then the stock may still have plenty
of room to rise.