Facebook Has No Business Being Compared to Apple, Google and Amazon

There is no doubt that Facebook will be successful, but I am not ready to accept that the stock will trade at about 30 times sales and 100 times earnings. The question that investors have a hard time answering is: Do stocks always reflect a company's underlying value? This is where investors often make the mistake of confusing "price" with "value." The result is often seen in the assumptions and expectations. But as logic continues to prevail, there is no scenario that I can envision in which Facebook, as great as it is, justifies the projected valuation. At least until the company shows that it can execute.

At the time of publication, the author was long AAPL and held no positions in any of the stocks mentioned, although holdings may change at any time.