Facebook “significantly undervalued”, says GLG’s Pearson

Facebook looks “significantly undervalued”, says GLG’s Philip Pearson, despite estimates that the social networking site could raise $5 billion (£3.2 billion) on listing.

Pearson, co-manager of the £83.5m GLG Technology Equity fund, says to an advertiser, the amount you pay “per eyeball” is 10% of the equivalent cost for a television advertisement.

“This appears to be way too low when you consider how much more you know about the Facebook user than you know about the demographic watching a TV show,” he says.

“As this price gap collapses, we should see dramatic growth in Facebook’s revenue and much of this will drop through to the bottom line. When you model that through, even at $100 billion Facebook looks significantly undervalued.”

Pearson has stated his intent to participate in the initial public offering and already has exposure through the fund’s holding in Russian social media site, Mail.ru. (article continues below)

The Russian site holds a stake in Facebook worth around 33% of the market cap.

Fund managers have been at odds over the valuation of the social networking site with Ian Warmerdam, co-manager of the £890m Henderson Horizon Global Technology and the £344.1m Henderson Global Technology funds, arguing that it is “impossible” to make an investment case for Facebook investment.