When Mark Zuckerberg founded Facebook just over ten years ago on 4 February 2004, I don’t think he ever imagined a company would grow to be worth $190 billion.
There are many analysts who still find it impossible to believe.
But money talks, and last week when Facebook released their second quarter financial results, the share price surged to just over $76 a share, taking the market cap of the social network giant to over $190 billion, or over R2 trillion.
“We’ve made good progress growing our community, deepening engagement, and delivering strong financial results, especially on mobile,” said Mark Zuckerberg, Facebook founder and CEO. “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.”
Facebook now has 1,32 billion users, or almost 20% of the world’s population. Over 30% of their users use Facebook on a mobile device, and the average American is spending more than 40 minutes a day on the social network.
Revenues were certainly impressive. Revenue for the second quarter of 2013 totalled $1.81 billion, an increase of 53%, compared with $1.18 billion in the second quarter of 2012.
Facebook is only as successful as the engagement of its users who in turn drive advertising and revenues. The more users engage the more profitable and appealing the social network becomes for advertisers.
Daily active users were 699 million on average for June 2013, an increase of 27% year-over-year. Monthly active users were 1.15 billion an increase of 21% year-over-year.
Facebook also announced that they have surpassed 1 million active advertisers on Facebook, driven by significant growth in local businesses.
The business is certainly booming and not showing any signs of slowing down.
According to eMarketer, advertisers will spend $545.40 billion during 2014. Here is the interesting part, and where Facebook is set to grow even more. The estimates from eMarketer show an increase of 16.7 in digital ad spend or $140.15 billion. For the first time digital adverts will surpass 25% of all media ad spending.
Facebook’s current share price is hovering at around $75 and with a market cap of $190 billion; it is more valuable than companies that have been around for decades.
Facebook is quickly catching up to giants like IBM and Walmart, and at this rate will be in the top ten of the most valuable companies in the world.
But there are the sceptics who still think that the business model cannot sustain this growth. When Facebook went public in May 2012 it was valued at $38 a share and it did get off to a rocky start. Right now though, those who invested are smiling as their investment has doubled. How high can Facebook go is the question?