Note to those rich clients of Goldman Sachs who are being offered the chance to invest in Facebook at a $50bn price-tag: don't do it, the valuation of the social networking site looks absurd.

Think of other companies that are valued at roughly $50bn – such as Tesco. The supermarket group is expected to record pre-tax profits of £3.7bn this year, which converts to about $5.7bn. It is suggested that Facebook achieved revenues – yes, top-line revenues, rather than profits – of just $2bn last year. The two companies cannot possibly be worth the same amount.

True, Google has discovered how to generate Tesco-style cash and profits in billions of dollars every year. But internet search engines and social networking sites are not the same thing.

Paying 25 times revenues for Facebook in its current form is asking to be disappointed – the company has not yet worked out how to produce sustainable profits from its (admittedly vast) base of users. Buy Tesco every time – its shares are also traded on a proper exchange, which is another virtue not to be sniffed at.