A debate about the most overvalued internet stock has emerged. Facebook, Twitter, LinkedIn, Yelp, and Netflix are all contenders. Twitter’s market capitalisation stands at $30 billion, despite the fact that it has never made a profit. Facebook’s market value is $170 billion, which is more than Disney or McDonald’s, despite the fact that its profits are much smaller. LinkedIn’s value is $24 billion, while Yelp’s is $5 billion. Netflix, on the other hand, is valued at $26 billion.
The price-to-earnings ratio is commonly used to assess whether a stock is overvalued. Facebook’s P/E ratio is 115, while Twitter’s is infinite because it has never made a profit. LinkedIn’s P/E ratio is 745, Yelp’s is 667, and Netflix’s is 210.
Another way to evaluate the value of these stocks is by looking at their price-to-sales ratio. Twitter’s P/S ratio is 36, Facebook’s is 20, LinkedIn’s is 19, Yelp’s is 19, and Netflix’s is 5.
By these measures, LinkedIn and Yelp appear to be the most overvalued. However, these are not definitive indicators, and the future will reveal which of these companies is truly overvalued.
Go to source article: http://www.newyorker.com/online/blogs/johncassidy/2014/02/which-internet-stock-is-the-most-overvalued.html