May 22, 2012

Opinion: Thoughts on Facebook and the Genius of Markets

By Sam Nejame, Promotum

Just an aside on comparative valuation. Isn't it a little strange, that a company which monetizes the social habits of teenage girls (Hello Facebook!), is more valuable than the future of food, materials and energy?

Without exaggeration almost everything we touch, wear, eat, drive etc. depends on chemicals and fuels. Yet, right now the market capitalization of the entire publicly traded sector for renewable fuels and chemicals is ~$2.5B (not including corporate subsidiaries, ethanol, sugar, etc.).

Facebook of course priced last week ~$100B (and falling). That's not quite in the league of ExxonMobil, but it's close to British Petroleum, and right there with the combined value of Dow Chemical ($39B), DuPont ($48B) and Archer Daniels Midland ($22B).

Does this make any sense? If Facebook disappeared tomorrow the world would go on. If petroleum disappeared tomorrow would there even be an economy?

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