With a P/E of 123.25 I think it's still got a long way to fall. Still I expect that will take a while. I think FB is reasonable prospects and I would be happy to buy FB with a P/E of 20, but the people don't want to sell anywhere near that price so it's looking like a long slow decline.
P/E only carries meaning for stable companies that aren't growing. If a company is investing for the long term, then their P/E might look terrible but they may be laying a base for huge profits in the future. Of course they might also be throwing money into a hole in the ground, but looking at the P/E ratio isn't going to tell you which of those are going on.
NB. Amazon's razor thin profit margins are what would worry me if I had a pile of AMZN stock, not their P/E ratio.
Amazon's revenue is over 10x that of Facebook, and it's earnings are low at the moment because they've been expanding like crazy. However, Amazon is a leader in several large and quickly growing industries (retail goods, e-books and other digital goods like music, and "cloud" services). Do Amazon's activities warrant a market cap that's about twice their current annual revenue? That's a pretty easy bet to make. Do facebook's activities warrant a market cap that's over twenty times revenue and is on the same scale as the entire global advertising industry?
