Are Facebook Inc (FB) & the Alibaba Group Bubble Stock?

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Facebook Inc (NASDAQ:FB) has had a tremendous run so far, but some people are getting skeptical of it. Times change suddenly, and it’s a known fact that Wall Street’s memory is too short. It hasn’t been long that Facebook Inc (NASDAQ:FB) came with its IPO and its stock suffered for quite some time, after that.  Now that the company is seeing tremendous gains, backed by mobile advertising revenue growth, no one is asking the same questions regarding Facebook Inc (NASDAQ:FB), they used to ask earlier. Keith McCullough, CEO of Hedgeye; Mike Holland, Chairman of Holland and Holland Company; and Scott Martin, Chief Strategist at United Advisors were on Fox Business, today to discuss if Facebook Inc (NASDAQ:FB) is a bubble stock.

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“[…] if the economy slows, what you don’t know about these social bubbles is how they act in a down ad cycle. Real simple, I don’t think the Zuck [Mark Zuckerberg] has got that in his back pocket, no offence, pretty smart guy, but again these are historical cycles that will matter to the social media bubble stocks that trade […],”McCullough said.

McCullough feels that it is cheaper to purchase Alibaba. Martin disagrees with McCullough as he feels that Facebook Inc (NASDAQ:FB) has done really well in the mobile advertising space and will possibly keep doing so and that’s why investors are going to continue chasing the stock. Holland feels that even though Facebook Inc (NASDAQ:FB)’s valuations is absurd, Alibaba’s valuation is more so because its IPO is priced at 40 times earnings, while major U.S. stocks trade at 12-15 times earnings. Facebook Inc (NASDAQ:FB) recently crossed the $200 billion market cap mark and whether the company will be able to sustain it, only time can tell.

As of June 30, 2014, Philippe Laffont‘s Coatue Capital Management owns over 5.8 million shares in Facebook Inc (NASDAQ:FB).

Disclosure: None

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