Assumptions:
- Facebook (NASDAQ:FB) will grow at CARG of 25% for the next five years. Historical growth of the company, emarketers report, and the consensus analyst growth projection data are used to derive this growth rate.
- Standard CAPM assumption as it is used to drive cost of equity.
- Growth of CAPEX will slow down in the next few years.
- NASDAQ composite returns are a near approximation for market returns.
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| Source: FocusEquity estimates |
Comments:
In the light of this valuation, Facebook (NASDAQ: FB) is trading rather
cheaply. Its stock has the growth-potential of around 30%; presenting investors
with a decent capital-appreciation opportunity.
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