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By Money Morning Financial News
Wall Street analysts now predict that Facebook share prices will double this summer.
If true, the rally could erase some losses for the millions who got ripped-off in the most controversial IPO in history.
But global financial expert Keith Fitz-Gerald warns:
Fitz-Gerald, author of the best-selling book "Fiscal Hangover, How To Profit From the New Global Economy," says Facebook is still way overvalued… and in bigger trouble than most people realize.
In fact, Facebook's May 16 IPO, which bilked investors out of an estimated $35 billion in the span of a week, exposed some enormous holes in the social network's basic business model.
"Start-ups are already cannibalizing Facebook's user-base," Fitz-Gerald points out. "Furthermore, the company cannot possibly dominate the mobile markets that are becoming the preferred channel for millions of people."
So that leaves one question investors want to know: What is Facebook really worth?
To answer that question, Fitz-Gerald dug deep for some hard data… data Wall Street analysts like Morgan Stanley and Goldman Sachs suspiciously overlooked.
His research led to a shocking conclusion: Facebook ranks as one of the most overvalued companies in history.
Editors Note: The number even surprised the heck out of me. To see Facebook's shocking true valuation…
Fitz-Gerald has been spot-on in his market valuations and predictions before. A regular commentator on Fox Business News, he predicted the dot-com bust in 2001 and the financial meltdown of 2008.
In fact, back in February, more than three months before the IPO fiasco, Fitz-Gerald warned readers not to go anywhere near Facebook shares.
At the time, Fitz-Gerald said buying the Facebook IPO was no better than buying a "lottery ticket."
If you invest in the Facebook IPO, Fitz-Gerald warned back in February, "you hope a greater fool comes along at some point in the future willing to pay you more money than you spent to buy the stock in the first place. Just remember -you're the greater fool who bought it in the first place."
We now know exactly how right Fitz-Gerald was… Those who listened to his advice saved a fortune.
Unfortunately, the Wall Street investment banks are at it again, trying to prop up their damaged mega-star while covering up their earlier mistakes.
Will investors fall for it a second time? "I sure hope not," Fitz-Gerald said, "Once they do the research like I have, I'm sure they'll be running for the hills."
Editors Note: Money Morning's Chief Investment Stategist Fitz-Gerald recently calculated Facebook's true share valuation. It's a shocking number every investor should see.
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