Over fourteen months ago (May 18, 2012 to be exact), Facebook, the biggest and most influential social networking site in existence today held its initial public offering (IPO). Although the first day of trading was rife with all sorts of delays and glitches which confused and infuriated a lot of investors, everything went as expected with Facebook’s share value debuting at $38. That was a good number considering the fact that the company was aiming for a valuation somewhere between $28 and $35 per share a couple of weeks before the IPO. During the first day, the stock went as far as $45 but this was proven to be unsustainable with the price slowly going down for the rest of the day. When the bell closed, the shares were worth $38.23 each. That’s just 23 cents above the debut price.
The events mentioned above happened over a year ago. So the question now is ‘How are Facebook’s stocks doing today?’ Since it went public, Facebook had a rough time keeping the initial valuation of its shares. The price went as low as $20.011 in August of 2012. The year 2013 saw an improvement in overall and average prices as the stocks hovered in the $22 to $29 price range. On May 17, 2013 which marked the first anniversary of the IPO, the price per share was $26.4, just $11.6 lower than the IPO price. However, for the rest of May all the way to the month of June, the stocks went down in value and got stuck in the $24-25 valuation.
Fortunately, the month of July saw the stocks slowly but surely regaining strength. July 25 in particular was a HUGE day for investors as the stocks soar from $26.32 the day before to a whooping $33.545. This was the first time during 2013 that the price per share went beyond $30. By the end of the month, the stocks were worth $37.96, just four cents away from reaching the IPO price. The outlook seems even more promising for this month of August. For the first few days, Facebook stocks were able to maintain their valuations at above $37. Most experts believe that this will likely continue to improve and if not, the decrease will be minimal compared to the sudden drops in prices in previous months.
The next obvious question is why the sudden and quick rise in Facebook’s stock price? A lot of investors sure wish to know why and because of their stakes in the company, they wish to know if this is just another price swing and that the price will go back down below $30 in the coming days or weeks. Although the increase in share valuation is more than welcome among investors, a lot of them are actually confused. Most trading experts offer the explanation that this quick rise of Facebook’s stocks is largely because of Mark Zuckerberg, the company’s chief executive. It’s definitely the most reliable explanation. Nobody was expecting the stock prices to rise this high but they did rise. Thanks to the no-nonsense leadership of the young Zuckerberg.
Facebook is now very close in reclaiming its $38 debut price. It it does, it will be the first time it will be able to do so since the company went public over a year ago. Wall Street has always been skeptic about Facebook’s business platform and model. The enduring theory is that the company won’t be able to sustain itself in the long run. It could be the next Friendster or the next MySpace, two companies that used to be behemoths that had been reduced to unknown online entities. Friendster and MySpace are has-beens. Will Facebook have the same fate? Well, that’s what the skeptics in Wall Street are trying to preach. However, with Facebook’s quickly improving stock prices, these skeptics should be decreasing by the day.
Most experts attribute this increase in Facebook’s stock price to the company’s foray into the mobile and tablet market. Zuckerberg was able to (and continues to do so) attract a huge market for its platform among smartphone and tablet users. Just how good is he doing it? Here’s a bit of statistic: For 2013, over 40% of Facebook’s advertising revenue are generated from mobile ads. That’s a huge growth considering the fact that the company wasn’t making any profits yet from mobile advertising over a year ago. One big reason for Facebook’s dominance over the mobile market as far as social networking sites are concerned is that its competitors are floundering to enter the market. These competitors may still have a cut of the market but these are trivial compared to Facebook’s reach and scope. The fact that Facebook earns 40% of its ad revenue from mobile markets tell the whole story.
Investors, shareholders and anybody with vested interest in Facebook have all the reasons to be happy. The stocks are increasing in value. More and more people are accessing the social networking site via smart phones and tablets. This translates to more revenue. The popularity of the site is not waning in any way. In fact, since it broke the one billion members mark, it still continues to register a healthy growth of new users. The skepticism in Wall Street is consistently being muffled. They can say what they want about the sustainability of Facebook’s business model but the site’s growth is contrary to everything that the skeptics have been preaching. The biggest proof yet this year that Facebook is here to stay is the growth in the value of its stocks.
In conclusion, let’s go back to the question of ‘How are Facebook’s stocks doing in 2013’? Well, it’s been a rough ride for the first half of the year but the second half is promising a lot of good things. The stocks started increasing in value after the company released their second-quarter earnings report for this year. Investors have every reason to applaud. However, the old lingering question remains. Will the company be able to sustain such rapid growth. Many are wary because this is just the first time during the year (2013) that Facebook is able to come just a hair away from it’s $38 debut price. Well, as of today, Facebook’s stocks are doing very well and investors are hoping that the company can sustain the growth or at least keep it from crashing down.