Is Facebook Inc (FB) Overvalued?

Facebook has no legitimate competition

By contrast, Google Inc (NASDAQ:GOOG) has suffered in the shift from desktop to mobile. Despite investing in Android, Google shares dipped earlier in the month after the company reported weak mobile ad revenue.

And Google Inc (NASDAQ:GOOG) is the only company with a truly competing product. Other social networks and apps exist (and new ones are appearing), but they largely satisfy different needs. Google+ is the closest thing to Facebook Inc (NASDAQ:FB), and the only site out there right now that could do to Facebook what it did to Myspace.

BTIG’s Rich Greenfield has been bearish on Facebook Inc (NASDAQ:FB), and has warned that Google+ could pressure the company. But last week, Greenfield admitted that he was wrong, and upgraded the stock from Sell to Neutral.

Google Inc (NASDAQ:GOOG) isn’t giving up on Google+, but it doesn’t seem likely that the service will replace Facebook anytime soon. On a pure numbers basis, it’s getting more users because the search giant is tying it in with its other services (like maps), but the people on it aren’t engaged.

In May, Reuters noted that while big brands may have Google+ accounts, they just don’t use them. Companies like Domino’s update their Facebook Inc (NASDAQ:FB) page on a regular basis; they ignore Google+ for months.

Investing in Facebook

Although Facebook Inc (NASDAQ:FB)’s current valuation may appear a bit excessive, other tech giants like Amazon.com, Inc. (NASDAQ:AMZN) have been overvalued for years, and have continued to reward shareholders.

Facebook has no legitimate competitors and has managed to succeed in mobile where other companies have failed. Although it has over a billion users, it continues to grow, adding and monetizing users who increasingly see Facebook Inc (NASDAQ:FB) as a regular part of their lives.

The article Is Facebook Overvalued? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Inc. (NASDAQ:AMZN), Facebook, and Google. The Motley Fool owns shares of Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB), and Google Inc (NASDAQ:GOOG). Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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