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How can a firm with such a low profit be worth

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Reference no: EM13212924

Facebook held its initial public offering on the 19th May 2012 with the offering the biggest in internet history. On the day of the offering the market capitalisation was in the vicinity of $90Bn USD. At the 20th December 2013 the market capitalisation was approximately $140Bn and a share price of $55USD. Net income for the year ended 31/12/12 was in the vicinity of $32m USD.To the uninformed observer this does not really make sense. How can a firm with such a low profit be worth so much on the stock market?

Reference no: EM13212924

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