Analysis of Facebook share price

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Shares from the Facebook Company are among the most recent to be quoted, in 2012. It is now possible to buy shares in this famous social network, or simply to speculate in the rise or fall of their price using CFDs on online trading platforms.  

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EU wants to discipline Google, Amazon, Facebook, Apple and Microsoft (GAFAM)

18/12/2020 - 09h37

Faced with the numerous complaints against the digital giants, the European Union finally wants to be respected. Brussels has decided to adopt rules to make the GAFAMs comply with the standards.

Elements that can influence the price of this asset:

Analysis N°1

Figures and statistics on advertising spending on the Internet are of the utmost importance since they represent the bulk of the group's sources of income.

Analysis N°2

We will also follow the forecasts concerning the activity of games hosted on Facebook, which have followed a relatively positive trend in recent years.

Analysis N°3

We will also monitor the development of new features and technical developments from Facebook in different areas of involvement.

Analysis N°4

Figures on the use of different media and media (PC or mobile) can also influence Facebook's activities and therefore its results.

Analysis N°5

The group also faces some problems related to the use of personal data and we will therefore monitor events related to these problems but also the implementation of solutions to protect users and reassure them.

Analysis N°6

Facebook's development in certain markets that are still closed to it, such as the Chinese market, is also a factor that could influence this action.

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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.

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:

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 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.

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.

Frequently Asked Questions

How to buy Facebook shares?

There are several means of trading in American Facebook shares online. You can in fact choose between two main methods at present, the first being the opening of a CFD trading account with an online authorised broker or the opening of a share account with ETFs. You simply need to open a trading account online and deposit the capital you wish to invest then take position on the upcoming trends of this asset.

What is the average progress made by the Facebook share price on the stock markets?

Since the initial quotation in 2012 Facebook shares have strongly increased in value, by nearly 300% in fact in around seven years. However, in 2018 following a scandal that affected this company, the Facebook share price fell by 26%. But we note that from the beginning of 2019 this asset succeeded in rebounding effectively and recovered over 19% in a single year. Since then the share price has succeeded in recovering to the level it reached at the beginning of 2018.

What are the notable strategic acquisitions completed by Facebook?

The Facebook Group has implemented a development and expansion strategy of its activities based to a great extent on targeted acquisitions. It is in fact the same strategy that is followed by other large businesses in this sector such as Apple and Google. Concerning Facebook, this group has notably acquired the Instagram, WhatsApp and Occulus VR companies.

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