[nandemo]

Wow. That's a lot of words for what's essentially just a back-of-the-envelope estimate.

Besides, claiming that the fair value is $10 but you should only buy at $5 is really odd. You must be extremely risk averse to require a 100%/year return. And that's after he discounted 30% relative to Google. Also, if predicting Facebook's financials is easier than it was to predict early Microsoft's, why should anyone expect returns as large as early Microsoft investors?

I suggest the saner, and much more concise estimate by NYU's Prof. Aswath Damodaran:

http://www.businessinsider.com/valuation-guru-facebook-is-wo...