Figure out Facebook's share price (MoneyWatch) Facebook (FB) reported a net income of $1 billion last year. In order to get the P/E ratio for the company, we then divide the number by the number of shares sold. So 1,000,000,000 divided by 421,000,000 = a price-to-earnings ratio of 2.37. Now is when the guesswork comes in. Stock prices are multiples of that number. The NASDAQ's current average P/E ratio is 27.9. So 2.37 times 27.9 equals a share price of 66.1. Voila! It turns out Facebook's IPO price was ridiculously undervalued. If we leave out the current decade's ridiculous P/E ratio, we see that historically the average ratio is 16.5. So 16.5 times 2.37 = 39.5. Again, Facebook's IPO was undervalued, but only by a bit. Apple's current P/E multiplier is 13.8, because people really, really like Apple and because it is making a lot of money. So 2.37 times 13.8 = 32.06. But 13.8 is for the hottest company on the planet -- one with a long track record of earning money. So you might want to go with a lower multiple, especially for a company that's just gone public. If you think it's actually going to be a lot harder for Facebook to monetize all the data it has then you might suggest P/E of let's say 12. That is a P/E that most companies would be OK with. 12 times 2.37 = 28.4. Let us know what you think the right multiplier for Facebook is and why.