19 June 2019

FACEBOOK

Often in the news for the wrong reasons, Facebook is not a company which many would call a success

by Michael Bray

Research Analyst

Group 10Created with Sketch.
Price
$177.47
Group 11Created with Sketch.
52 Week High-Low
$218.62—$123.02
Page 1Created with Sketch.
Net Yield
0.0%
Group 12Created with Sketch.
Hist / Pros Per
22.8—20.9
Page 1Created with Sketch.
Equity Market Cap
$506,623

Often in the news for the wrong reasons, Facebook is not a company which many would call a success. But from a financial perspective the business has performed incredibly well since its stock market listing in 2012. Operating profits have grown over 46 times during that time as the business has benefitted from the spending shift from traditional advertising to digital advertising.

Through its primacy on social media platforms Instagram and Facebook itself, Facebook has been able to acquire an impressive 21% market share of global digital advertising spend, second only to Google. With Facebook looking to monetise its platforms further, and global digital advertising spend expected to increase by 17% throughout 2019, the business looks well positioned for continued growth.

Growth however isn’t the main source of concern for Facebook - the issues around privacy and data usage of its platform users are a genuine concern for investors. Regulatory oversight looks imminent, with even CEO Mark Zuckerberg recently calling for increased regulation. The form this regulation takes, and the financial implications on the business, are still unknown.

 


Also in this issue

Businesses that benefit from the network effect are said to see the value of their product or service increase with the number of users. This may sound simple, but it is actually quite uncommon and is…

Barclays Bank has been in the news recently, but not quite for all the right reasons. An American shareholder activist called Ed Bramson has been pushing for the bank to restructure its investment…

Summer Issue Twenty Seven