[Osiris]

I've never really understood this MBA mentality because growth must stop at some point. There are only so many humans on earth. The expectation that a company can grow forever is impossible, at least until we find an alien planet with a population willing to sign up for Facebook.

[umanwizard]

Right, of course. The claim wasn't "all companies must continue growing forever or they are bad companies / their stock will crash". It was rather "Facebook in particular's current valuation is based on investors predicting it will continue to grow".

When (not if) Facebook stops growing, it will be worth _something_. Owning its stock is a bet on what that number is, and the stock price reflects the market's collective estimate.

[posix86]

The stock market price today is based on the value people EXPECT the company to have at some point, not the one it has. If people expected it to grow much more, and it doesn't, the value falls to the level it possibly should've had in the first place.

[tinco]

It's not MBA mentality, it's stock investors mentality. I don't think Zuckerberg or any other executive is out there buying FB shares at $320. It's outsiders gambling on the continued growth.

[Calist0]

Meta however is buying FB shares. They spent 20 billion in Q4 and 14 billion in Q3 on buying back shares. They must be confident..

[tinco]

Oh, in that case I'm wrong in my opinion.

[bombcar]

Share buybacks usually indicate the company can't figure out what to do with their cash stockpile, and are doing a tax-advantaged dividend (it effectively gives the money to shareholders, but they don't have to incur a tax hit).

It could mean they're really certain it'll be worth more later, or it (more likely) could mean they ran out of ideas and are trying to shore up the stock price, too.

[spookthesunset]

True but Facebook was valued for this growth. Better or worse if they don’t grow their stock price will take a well deserved beating.