Today marks the 5th year anniversary of Facebook since its IPO back in 2012. Analysts back then felt that shares were overvalued; however, today the social media titan turned a profit from 30% to more than 256% and has a current market cap of $420B.
Facebook not originally created to be a company
The social networking giant had its initial public offering (IPO) on May 18, 2012 (Friday). It is the biggest IPO in history with $38 a share. It was valued at $104 billion (the largest valuation up till now).
CEO Mark Zuckerberg even affirmed that it is not part of his original intentions to make the social networking site a company, but to open the world of communication for people to be connected.
Facebook after its IPO
On the first day of its IPO, the stock price of Facebook reached a mere $0.23. The day did not go well as shares traded late and several investors complained due to late and failure of confirmation of orders. The situation worsened to filing complaints in the court.
The succeeding months, there had been reports that the stock plunged almost half of its opening price at $17.55. There had been so many criticisms that time which even led to a movement to throw out its CEO, Mark Zuckerberg in favor of a more experienced leader.
However, Zuckerberg and its team started changing their strategy to protect FB stocks and drive significant revenue from Facebook’s services. Ending January of the following year, the shares went up to over $32 - a comeback price that seemed somewhat acceptable. Yet, on its first year IPO anniversary stocks declined to nearly $27 compared to its initial $38 on their first public day. It terribly led to investors’ disappointment that time.
Facebook and its transformation
Looking back in its first IPO anniversary (2013), the company reached a market cap of over $60 billion. It employed almost 5,000 employees and had an active user base of above 1.1 billion.
It transformed in a sense that after its IPO, it needs to consider not only its users but also its shareholders. It pushed the social networking giant to advance its operations and add new features.
There had been criticisms back in 2012, that the social media titan is concentrating much on Web features instead of planning for a mobile strategy. Almost a huge chunk of the population was abandoning desktops and was switching to phones and tablets. Analysts conveyed a number of reasons stating that the future of Facebook looked hopeless that time.
Facebook did not become disheartened, but instead, it used its known weakness as a motivation. Experts have recognized that mobile is the biggest drawback of the company that time. Reluctant at first, since the company would not be able to generate any substantial revenue from mobile devices, however, former CFO David Ebersman stated a confirmation that Facebook can be expected to invest heavily in mobile in no time.
Missing the Facebook Train
On April 2013, Facebook introduced its new Facebook Home compatible to smartphones. It also has improved its features by adding clickable hashtags the same year. The company’s earnings as well increased by $64 million (earnings of $523 million) compared from last year. Its mobile users reached a count of 945 million. The following year, its market capitalization rose to more than $134 billion.
Last year (2016), CEO Zuckerberg divulged his plans of improving three key areas: venture on artificial intelligence, increased worldwide creativity, as well as virtual and augmented reality.
Facebook has done a lot better compared to other tech stocks after it went public. With all of the great improvements both in features and stocks that happened to Facebook, the social media titan has surpassed even the biggest name in the technology sector listed on the S&P 500. Indeed, Facebook has a bright future ahead with the number of developments it had done in the past - it showed that it can use its weak spots and work on these to be successful.
Do you want to get updated about the latest happenings in the stock market, financial world and the economy in general? Subscribe now at FSM News to increase your knowledge and improve your familiarity!