Kellogg School of Management at Northwestern University

In early February, when Facebook's IPO seemed imminent, Anup Srivastava, an assistant professor of accounting information and management, put together an interactive valuation tool that let people explore how tweaking different projections would affect the stock's valuation. Built into that were Srivastava's own projections. Projections that, as the stock's price has sunk ever lower, have largely been proven true.

"We predicted a best case valuation of $25 billion," Srivastava said. "The firm raised $16 billion dollars, and retained $7 billion. Facebook's post-money valuation stands at $41 billion today, implying a pre-money valuation at $34 billion.

"That is not far away from $25 billion what we predicted, certainly a far cry from $100 billion that the market valued just nine months back."

There's a hidden message in FB's continued slide, too, one that could apply to many more stocks. "The example shows that cash is king, and any valuation other than based on cash flows is unlikely to sustain for long," Srivastava remarked.

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