But on Oct. 23 the company beat analysts' expectations, and the price jumped from $19.50 to $24.01 overnight. So we had to wonder: Impressed yet, Hamadeh?
"I think it's not as good as it seems," he told me, pointing out that the stock has slid since then down to $22.10 on Friday.
And it should be lower still, he said. One way of analyzing a stock's value is to look at its price to earnings ratio. That's the market price of a share divided by the annual earnings per share.
"The price to earnings ratio should be the same as its annual growth rate," he said. Normally the growth rate would be calculated based on earnings, but Facebook hasn't turned a profit, so Hamadeh is using its revenues as a substitute. And those revenues have been increasing at an annual rate of 34%.
But Facebook's price-to-earnings ratio was 232.58 when the market closed on Friday -- almost seven times its growth rate.
In addition, Hamadeh noted, the company's revenues overall may have gone up, but its payments business actually shrank in the fourth quarter. That's the revenue from partners like Zynga. "That's supposed to be an important business line for them," said Hamadeh.
And, he pointed out, more stock will come available in November. Insiders, such as company executives, were forbidden from selling their shares until six months after the IPO. Now these shares may come onto the market, depressing prices.
The bottom line is that Facebook's stock is still overpriced, said Hamadeh, mostly because many small investors have been dazzled by the excitement around the company.
"If it was any other company or you blocked out the name, you would get [a stock price] in the teens," he said. "And eventually the smart money will value it appropriately."
But not yet, apparently. The mean analyst price target on Yahoo! Finance for Facebook is $28.37.