(Most of you know the details already) - From Investec daily report: "Today is an historic day in the history of world stock markets as eight year-old Facebook lists on the Nasdaq with an initial market capitalisation in excess of $100bn. Selling $16bn worth of stock to the public, this will be the third highest amount of capital raised in an IPO and the most valuable company to make a debut listing on a US stock market. The Facebook listing will make several dollar billionaires, most notably its 28 year-old CEO, Mark Zuckerberg who with shares to the value of $19.1bn makes him the 29rd richest person in the world. But if one steps aside from the Facebook frenzy and analyses the finer details, there is not that much to get excited about in terms of long-term investment fundamentals. At 28x revenue and 103x earnings, Facebook will be one of the most highly priced large cap shares in the world. On a listing price of $38 and expectations to earn $0.61 this year, it places Facebook on a forward PE of 63x. Even if Facebook quadruples earnings over the next three years, it still places the share on a three year forward PE in excess of 25x. The Facebook listing is very expensive, whichever way you look at it. To put its valuation into context, Apple is trading on 13x historical earnings and Google on 19x. And if you compare Facebook to other successful IT companies, the investment case is questionable. Google has a sustainable competitive advantage in internet search and no real competitors. Microsoft had a near monopoly on most of the software market for several decades. Apple is an innovative company that has provided niche, market leading and high-margin products for many years. What does Facebook provide? It has a website that connects almost 1 billion people and no real competitors in its space. And those users are loyal – roughly half of them use Facebook on a daily basis. It also has strong brand recognition and devout followers. But other than its massive network of users, there are no major barriers to entry – costs to enter the market are low and regulation is almost non-existent. The future earnings and investment case for Facebook depends largely on (1) how Facebook monetises their large network, primarily via advertising and gaming revenue, and (2) how long Facebook remains the dominant company in its space. While Facebook is the certainly the flavour of the month, that does not necessarily mean it will be so several years out. There are many potential threats to Facebook’s dominance in the social network space. And most importantly, and at over 100x earnings, its IPO is giving Facebook a lot of credit for future profit growth of the business several years out, which is anything but certain. Roy Topol"