General presentation of Facebook:
Who has not heard of the name Facebook? Few people certainly as the Facebook Company is none other than that which launched the famous social network of the same name. This company incarnates the type of internet success sought by numerous internet companies with a number of unique users that passes the one billion mark.
It can equally be noted that, compared to the number of users that this site enjoys, the capital obtained at its introduction on the market enabled an evaluation of $100 per website user. It is therefore not surprising that many Facebook users actually invested in this company from the start, envisaging a constant rise and exponential growth in the number of potential prospects for this network together with the turnover figures over the long term.
The major competitors and partners of Facebook:
The Facebook Group, as you already know, exercises its activities in the social networks sector. In this sector, and following the strong success it has experienced, it has a number of large competitors that exercise similar activities and are quoted on the stock markets, these we will examine here in detail.
- LinkedIn is a social network dedicated to professionals, it can be considered as a major competitor to Facebook.
- Twitter, due to its operational method similar to that of Facebook is currently its major competitor and is also intended primarily for individuals.
- To conclude, Google with its video sharing networks such as YouTube is also a serious competitor. It should be noted that this group is currently developing its own social network under the name iGoogle. A number of companies have already joined this programme including Yahoo, Viadeo and Friendster.
Of course, other small companies and start-ups represent possible competitive threats to the social network company Facebook in the coming years but here we have chosen to examine only the major existing competitors.
The major partners of Facebook:
Apart from the professional partners of Facebook we can cite several stock market giants that collaborated with this company in 2016 on the creation of a partnership related to artificial intelligence for the benefits of individual members of society. These companies included IBM, Microsoft, Google and Amazon.
This collaboration is in fact a not-for-profit organisation that has the main objective, as indicated by its name, of undertaking research into the good practise of the use of artificial intelligence which is advancing rapidly nowadays. The results obtained through this research due to the collaboration of these various companies will be published under an open license.
The introduction and quotation of Facebook shares:
Historical data regarding the movements of Facebook shares is still fairly limited as these assets only came onto the market on the 5th June 2012. These company assets were made available through the Nasdaq market where other technological assets are quoted such as Google and Apple.
However, it can be seen that the IPO of this company attracted many investors and was successful. In fact, over 100 billion of U.S. Dollars were made in that one single day.
Historical movements of the Facebook share price:
A few years after the IPO of Facebook shares on the Nasdaq stock market it has become possible to predict the company’s growth possibilities over the long term. The historical technical analysis of this stock from 2013 to today is interesting because it shows above all a high volatility and strong movements of this share.
On its initial introduction on the stock markets, over-valued expectations led to a slight fall in the share price over the first few hours of this asset’s IPO. However since then it would be fair to say that Facebook shares have more than recovered the numerous points initially lost. This asset did actually reach its historical low point of $18.08 in August 2012 but has just about always been on the rise since then and is continuing to approach the psychological threshold of $150.
We also observe numerous rising and falling micro-movements during this base trend that represent many profit opportunities with a short or medium term trading strategy using CFDs.
Financial and economic history of Facebook:
Here are some of the most important dates in the economic history of the Facebook Company:
- On 8 August 2010 Facebook purchased 19 Friendster patents.
- In January 2011 the company was valued at 50 billion dollars.
- In March 2011 Facebook launched its VOD service.
- Purchase of the Push Up Press Company by Facebook in August 2011.
- In March 2012 Facebook launched the App Center online applications boutique.
- In April 2012 Facebook purchased Instagram for a billion dollars.
- In May 2012 Facebook purchased Glancee.
- In February 2014 Facebook purchased WhatsApp for 19 billion dollars, 15 billion of that was in exchange for shares.
- In March 2014 Facebook purchased the Oculus VR Company specialised in Virtual Reality for two billion dollars.
- In September 2016, Facebook issued a press release announcing a partnership with the IBM, Google, Microsoft and Amazon companies relating to artificial intelligence for the benefit of individuals and society that would be in the form of an NGO.
- In 2016, Facebook launched a payable social network for businesses under the name ‘Workplace by Facebook’.
With this information, you will find it easier to understand the stock market movements of this asset and the investors’ interest in it.
The advantages of Facebook shares as a stock market asset:
Since its initial IPO Facebook shares have engendered serious interest among investors worldwide and for good reason. It is undeniable that this asset offers numerous advantages for trading online which we will examine in greater detail here through a summary and review of its major benefits:
- The first thing that can be noted concerning the Facebook Company is the company’s ability to increase its success and profitability year by year. The financial position of the company continues to improve steadily and profits are constant. These particular characteristics ensure that investors are happy and therefore Facebook shares are considered a popular choice for stock market portfolios.
- We can also note that the Facebook group displays an excellent market penetration on the international level. It actually touches more than 66% of Internauts in the United States and even 46% of Internauts in Asia including China which is a market sector recognised as being difficult to penetrate. In Europe over 46% of Internauts have a Facebook account that they use regularly.
- Although Facebook has a number of competitors in the form of other social networks such as those we detailed previously it remains a major player in this activity sector, keeping its position as leader in terms of market share. The company share price therefore benefits from this consistent popularity by attracting new investors. The success of this social network is mainly due to a particular sociological phenomenon in its users of sharing and dependency which is a real guarantee for the future of this platform.
- Finally we should point out that the boost in targeted acquisitions by Facebook over the last few years has also contributed to its success, such as the acquisition of Instagram in 2012.
The Facebook group has a number of opportunities open to it in the coming years which could enable the company to gain a larger share of the market and increase its profitability. Over the last few years we note a major increase in online advertising by companies. As Facebook’s profitability model is primarily based on this type of revenue it would be safe to say that this company can only benefit from such an increase.
In the online gaming sector the Facebook group still has much to gain as the results obtained over the last few years are consistently positive.
The disadvantages of Facebook shares in the stock market:
As we have just seen, the financial strength and the rather positive future prospects of this company, suggests that this stock market asset is particularly interesting for investors. But of course, this company does not only present advantages and it is also necessary to know its main disadvantages before starting to trade online.
Among the main disadvantages of Facebook shares, we can mention a current lack of effectiveness of the advertisements on the pages of the social network, which is struggling to recruit new advertisers, despite a strong demand.
We can also notice that the Facebook application for smartphones, although it has been praised by the critics for its quality, it generates less revenues than its online version, especially because of lesser follow up of advertising links. However, the users of the social network increasingly prefer smartphones to computers which may eventually lead to lower profitability and increasing difficulties for the company to recruit new advertisers.
Facebook also faces some legal battles, particularly with regards to the disclosure of private information. Even though the company has made real efforts in this regard in recent years, the use of personal data by the social network is still controversial and could have negative repercussions in the future.
Finally, one of the last weaknesses of Facebook concerns its increasingly strong exposure to an increasingly aggressive competition. Maintaining its position as the leader in this sector will depend mainly on its ability to innovate in order to remain constantly on the top of the trend and to offer features that will appeal to the general public.
In conclusion, even if Facebook has to face certain obstacles to maintain its popularity and a rising profitability, the objectives remain reachable and this share counts with a positive feedback from analysis experts. It is however advisable to carefully follow the news about the company by subscribing to a newsfeed or by using a specialized site such as that of your online broker because this company could have a strong reaction to advertising effects.
Facebook and its numerous acquisitions:
Facebook is mainly known for its social network, but the company has very diversified activities, mainly online, thanks to a well stablished acquisition strategy. In fact, this company has bought several companies in the last ten years, for a total amount of approximately 23 billion dollars.
Among some of the more attractive companies acquired by the group, there is of course the WhatApp application, the social network Instagram, Oculus and LightBox, but the list does not stop there. In fact, some years, Facebook has acquired several different companies during the same year, we invite you to discover here the whole list of Facebook acquisitions in detail, so that you can have a good overview of what has the Facebook empire become.
- AboutFace, in August 2005
- Parakey, in July 2007
- ConnectU, in June 2008
- FriendFeed, in August 2009
- Octazen, in February 2010
- Divvyshot, in March 2010
- Friendster, in May 2010
- ShareGrove, in May 2010
- Nextstop, in July 2010
- Chai Labs, in August 2010
- Hot Potato, Also is August 2010
- Drop.io, in October 2010
- Le nom de domaine FB.com, in November 2010
- Rel8tion, in January 2011
- BELUGA, In March 2011
- snaptu, in March 2011 as well
- RecRec, also in March 2011
- DayTum, in April 2011
- Sofa, in June 2011
- MailRank, in June 2011 too
- Push Pop Press, in August 2011
- Friend.ly, in October 2011
- Strobe, in November 2011
- Gowalla, in December 2011
- Instagram, in April 2012
- Tagtile, Also in April 2012
- Glancee, in May 2012
- Lightbox.com, Also in May 2012
- Karma, in May 2012 too
- Face.com, in June 2012
- Spool, in July 2012
- Acrylic Software, in July 2012 too
- Threadsy, in August 2012
- Atlas, in February 2013
- Osmeta, March 2013
- Hot Studio, in March 2013
- Spaceport, in April 2013
- Parse, Also in April 2013
- Monoidics, in July 2013
- Jibbigo, in August 2013
- Onavo, in October 2013
- SportStream, in December 2013
- Little Eye Labs, in January 2014
- Branch, in January 2014 also
- WhatsApp, in February 2014
- Oculus VR, in March 2014
- Ascenta, also in March 2014
- Liverail, in August 2014
- Pryte, in August 2014
- PrivateCore, in August 2014
- WaveGroup Sound, also in August 2014
- Wit.ai, in January 2015
- Quickfire, also in January 2015
- TheFind, in March 2015
- Surreal Vision, in May 2015
- Pebbles, in July 2015
- Masquerade, in March 2016
- Two Big Ears, also in March 2016
- Nascent Objects, in September 2016
Even if not all of these companies have a very profitable business model, most of them are very successful and can fuel the profits of the American group. You can analyze the results and news of these entities as part of your fundamental analysis of Facebook shares.
Of course, we also advise you to carefully monitor all future purchase transactions done by Facebook in the future which could have a direct and immediate influence on the price of this security.