Aswath Damodaran: Facebook 'Richly Priced' [VIDEO]

It’s time to take profits in Facebook after the run-up in its share price, NYU professor Aswath Damodaran says.

Video excerpts and transcript below.

Facebook stock ‘richly priced’: Expert


expert and the professor of finance at nyu aswath damodaram. i have done five valuations of facebook in the last year and the lowest number i have got is $24 and the highest number i have got is $28. so the value of the company hasn’t actually wavered that much over the last year and three months. i don’t share the euphoria that people have about mobile monetization because i think they needed to do that. if they hadn’t done it, it would have been disastrous. so at $38 i think the stock is richly priced. i wouldn’t be a buyer at $38. but i’m glad i was here a year ago when the stock was at $18 and $19 when i thought it was actually a great buy. you would be a seller though, right? you would be a seller though today? i would be a seller today. professor, this is jon najarian. who in the mobile space do you think can come even close to the generation of dollars that facebook can based on what we’ve seen and where they’re going in the future? do you think there’s anybody else out there that can generate these kind of numbers? i think facebook is in a strong position in mobile media. the point i’m making is the original revenues that were forecast for facebook presumed that they would succeed in the mobile media market. so in a sense what they’ve done is as somebody described it taken away that uncertainty and that’s a good thing. facebook in many ways is a much better company today than it was a year ago, a much more solid company. it’s not as good an investment. do you think expectations have just gotten too low

Facebook’s Zuckerman: Hoodie to hero?

The FMHR traders debate whether the social media giant is really back for the long term or is Google the better buy. And Aswath Damodaran, NYU professor discusses why he “does not share the euphoria” of Facebook’s mobile monetization and says that at $38 a share, it is “richly priced,” and he “would be a seller.


welcome to the halftime show. it’s one minute past noon. four hours to go until the close. take a look at the major averages on this big fed day. let’s not forget, the fed statement coming this afternoon. you have got the jobs report coming later this week as well. there’s a look at the dow up 56 points. was a triple digit move early. not so much now but still a decent gain for the dow, s&p, and nasdaq. chapman unplugged. outspoken activist investor robert chapman is here live on herbalife, on icahn, on ackman, and now on soros, too. linked in set to report earnings tomorrow. with the stom already up 80%, should you get short ahead of the numbers. a trader street fight is just ahead. first, our top story is face lift. after more than a year floundering below its ipo price, facebook finally gets back above 38 bucks. but is the comeback a sign of greater things to come or will it be short lived. is facebook a better buy than google or is apple about to break out once again? we are trading the action today with n najarian, simon baker, mike santoli and stephanie link. the importance of getting back to theiimportant of getting back to the ipo is what? i think a lot of people were waiting for it to get back to the ipo price. technically to break out of here, it will be challenging. the stock is up 51%. before i was owning facebook going into earnings. i think a better position would be google. they missed their earnings on noncore assets, motorola, nexus. i think they dominate in the search and advertising. i think if you’re looking over the second half of next year, google versus facebook, i would be long going. . didn’t facebook, doc, give people every reason to be comfortable and confident about the stock going ford. it proved a lot of people wrong. they absolutely did. obviously they caught a lot of shorts. there were a number of folks that had bet against them being able to monetize mobile in the way they have. and this is the number one story in monetization of mobile right now. i mean, they are bigger and better and doing a better job than anybody else in the space because of how people use facebook. unfortunately, as we’ve talked about, for google to get there where they are, that’s a series of acquisitions for them to get there because people don’t use their mobile the same way that they use facebook. they’re not searching. they’re going to yelp, they’re going to trip advisor, going to they’re not going to google to search for those things and when you’re in facebook you’re getting the embedded advertising from the news your friends are sending around. that is a turning point for facebook. so simon’s point i’m not surprised to see people take some off the tanl because of the 51% run but i think if you want to get shorted, you’re making a big mistake. steph? i think $38 is going to take a long time. there’s a lot of supply. i wouldn’t be surprised just given the run but i would say this. the stock is trading at 37 times ex cash. they just grew earnings 61%. so the stock if you want to look at it on kind of a peg basis, if you will, it’s not extremely expensive, and importantly is the mobile monetization progress they have made. in my view, i have said it before, i think the operating margin improvement and the positive operating leverage as a result of those margins being better than expected is definitely different than what we saw even last quarter. i thought last quarter was okay. this one obviously it got more juice. i think the pricing power story is also very powerful. i look at apple and say this stock is so cheap, i kind of gravitate towards that as a contrarian investor — you say apple is the better buy than both facebook and goingle? i say it’s a contrarian play. it’s cheap with more expectations but

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