As Wall Street eagerly anticipates the Facebook IPO, Jim Cramer on Monday analyzed the No. 1 social network.
To Cramer, it’s painful to think everybody wants to own Facebook, considering it has no earnings and no track record as a public company. Then again, Cramer said Facebook’s growth rate is “truly staggering.” The company has only just begun to explore all of the ways it can make money, too.
“Facebook has become the de facto you, with all of your information, your passwords, your history,” Cramer said. “It’s the first company where you may not have to click on the ads to reward advertisers. There’s going to be some pushback by advertisers on that, but the question will come down to, which is more able to reach the coveted younger demographic: magazines, newspapers, billboards, television, or the Internet identification of a billion people, which is where Facebook is headed.”
Nevertheless, Cramer thinks Facebook will be “inherently overvalued” from the start due to its lack of earnings. Cramer still recommends investors get in on the Facebook IPO, though, because he thinks it’s a winning trade.
“This market loves growth,” Cramer said. “That’s Facebook.”
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