Facebook Inc. went public in 2012 on NASDAQ at an initial price of $38.23. Since then, FB stock price has appreciated more than 63%. The shares are up 14.2% year to date. Facebook initially raised $16 billion from the public offering. Since 2010, Facebook has seen its Revenues increase every year. FB Revenues for 2013 were announced at $7.9 Billion which were up 55% from 2012 Revenues.
Since 2010, the Net Income is up 303% and Earnings for the same period increased by more than double. Lately Facebook shares have performed better than its competitors like Amazon and LinkedIn. The shares of Facebook lost 5.4%, while shares of Twitter and LinkedIn lost 8.7% and 13% respectively.
One very important factor in the performance of the company is the Fed tapering. Due to the Fed tapering, the liquidity for FB will potentially dry up since it is one of the high beta stocks.
But even if the Economy doesn’t do well, Facebook would still be in a profitable position. People use Social Media regardless of what the economy is performing. And advertisements Revenues are expected to increase which would be focusing more on Mobile marketing due to the changing consumer preferences.
If we compare Revenues for FB with the closest Rivals including Twitter, LinkedIn, Netflix and Amazon; it comes second in terms of Revenues just below Amazon but it beats all in terms of Net Income recorded for the FY13. Amazon with Revenues of nearly ten times as of Facebook, couldn’t record better Net Income which was 447% less than of Facebook. The main difference between the two is the expenses.
Facebook’s trailing P/E Ratio is also the best among its rivals. FB P/E is 96.5 while Amazon’s P/E is 541. So FB is still in a better position than its competitors.
Earlier, Facebook announced the acquisition of WhatsApp, a popular messaging application. The deal was stuck at around $19 billion. Since WhatsApp core functionality is somewhat similar to Facebook, the deal was very important for FB in terms of strategic objectives. WhatsApp has now over 320 million daily active users that communicate with each other on the platform. After this deal, the messaging app would still be free but require users to pay a nominal fee of $0.99 per year. Continue reading