When will Facebook go public?
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Facebook is going to join those other 4 tech giants in the $300 billion market cap club this morning after reporting another stellar quarter yesterday. Amazon joined the club just yesterday while Google (now Alphabet) and Microsoft joined (rejoined in the case of Microsoft) a couple of years ago. Apple hit that market valuation sometime in 2011 I think. Amazingly, those 5 companies are among the 7 U.S. publicly traded with the largest market caps now. The only other companies in the top 7 are Exxon-Mobil and Berkshire Hathaway (Warren Buffett's company which holds full or partial ownership of a lot of other operations, so I wouldn't consider it on the same terms as the others because it isn't as much a single business operation as the rest are.)
Ballpark-ing them: Apple's around $700 billion, Google's around $500 billion, Microsoft's around $450 billion, and Amazon and Facebook are just peeking their heads above $300 billion. So now Facebook is valued more highly by the markets than the likes of G.E., Johnson & Johnson, and Wells Fargo. It's worth a Chevron AND a BP or a Walmart AND a MasterCard. Crazy. Apple's approaching 4 times the market cap of Walmart, btw, and has generated 3 times its earnings in the past year.
Facebook is, of course, getting a really high multiple to have reached that $300 billion valuation level. It's still being priced based largely on future (substantially greater) possibilities. But it's also making quite a bit of money today; it has executed remarkably well and done a great job of quickly ramping up its monetization of its services. The stock stumbled out of the gate because (1) it went public at the same time it was trying to figure out what the heck to do with mobile (i.e. how it was going to generate mobile ad revenue) so early on it wasn't clear it was going to do well on that front and (2) because Mr. Zuckerberg was making it clear he wasn't all that concerned about making money in the short term, he cared more about building something that would greatly benefit society in general.
But things quickly changed on both of those fronts. Facebook got its #### together when it comes to mobile advertising and has been mostly hitting home runs ever since, it's got mobile advertising figured out about as well as any of the big players. I think it's ahead of Google on that front. And despite Mr. Zuckerberg's (somewhat naive I think) initial hopes that he'd be able to mostly pursue his own vision for the company even after Facebook went public, rather than having to make a lot more decisions with nearer-term profitability in mind, he (or at least the company's decision making) quickly changed course and started focusing a bit more on the latter. He set things up such that he technically maintained near complete control; he retained the majority voting interest in the company. But the pressure of answering to shareholders was still enough to force a shift in priorities I think, not necessarily a lot but enough such that the company started making more money sooner than it otherwise might have. That's meant almost immediate operational results and the resulting climb in the stock price.
At any rate, Facebook is a remarkable business story now as well as being an incredible cultural story. And those five companies - Apple, Google, Microsoft, Amazon, and Facebook - are the face of not just the tech industry, but also big business in general, going forward.
Larry Gude
Strung Out
We should be deeply concerned that we place so much value on things like this. Food? Medicine? Teaching? Anh...
Sharing pics of our cat, surfing porn, buying crap; the most prized things in our lives.
We are ####ED up.
somdfunguy
not impressed
I was thinking about this the other day. Since the update to iOS 9 ad blocking is now available in Safari on newer devices. Facebook smartly keeps you in their app when clicking on a link instead of launching Safari. More ad revenue for the Zuck.