Why Facebook Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, social networking giant Facebook (NASDAQ: FB  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Facebook, and see what CAPS investors are saying about the stock right now.

Facebook facts

   

Headquarters (founded)

Menlo Park, Calif. (2004)

Market Cap

$65.0 billion

Industry

Internet software and services

Trailing-12-Month Revenue

$5.1 billion

Management

Founder/Chairman/CEO Mark Zuckerberg

CFO David Ebersman

Trailing-12-Month Return on Equity

0.6%

Cash/Debt

$9.6 billion / $2.4 billion

Competitors

Google (NASDAQ: GOOGL  )

Microsoft (NASDAQ: MSFT  )

Twitter

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 41% of the 1,718 members who have rated Facebook believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, JoeArizona, succinctly summed up the bear case for our community:

Facebook is on top of the social computing world ... for the moment. Personally, I was very turned off by the corruption and dishonesty surrounding the IPO. I feel that the book value of the company has been vastly overstated since the beginning. And if [Facebook] tries to monetize to justify their elephantine valuation, they run the serious risk of alienating their users, driving them to the next big thing. I just don't see how they can keep it going.

Of course, that short pitch doesn't even come close to telling the entire story for Facebook. You're in luck, though. The Fool's brand-new premium report on Facebook tells all sides of the story for one of the most powerful Internet companies in the world. You can grab your copy now, which comes with free updates for 12 months, by just clicking here.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


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