Shares of Facebook, Inc FB hit an all-time of high of $110.65 yesterday, before closing at $108.76, up 4.64%. At yesterday’s closing price, Facebook’s market capitalization came at $306.4 billion, ahead of General Electric Company’s market cap of $299.6 billion. It is now ranked as the seventh largest company on the S&P 500 Index, as per CNBC.
Facebook’s market cap is now almost catching up with that of Amazon.com, Inc. AMZN, which is valued at $307.3 billion. With $674.2 billion in market cap, Apple Inc. AAPL is the largest S&P 500 company, followed by Alphabet Inc. GOOGL with $523.1 billion, Microsoft Corporation ($434.4 billion), Exxon Mobil Corp (353.1 billion) and Warren Buffett’s Berkshire Hathaway ($336.7 billion).
Facebook’s solid third-quarter 2015 numbers are driving the share price rally. The social networking giant reported adjusted earnings of 36 cents on revenues of $4,501 million, easily topping the Zacks Consensus Estimate for earnings of 35 cents on revenues $4,386.7 million. The growth was driven by a significant upside in advertising revenues (up 45%), particularly mobile ad revenues (up 73% year over year).
Another key aspect of Facebook’s earnings announcement was its user growth story. As of Sep 30, 2015, Facebook’s Monthly Active Users (MAU) improved 14% year over year to 1.55 billion while Daily Active Users (DAU) grew 17% year over year and crossed the billion mark. Statistics on its video service were even more impressive. Facebook said that there are an average of 8 billion videos daily on Facebook with over 500 million users watching regularly.
Also, average price per ad increased 61% from the year-ago quarter despite a declining trend in the overall ad market. This reflects the company’s strong engagement levels.
Facebook’s shares have ricocheted fairly well since its IPO. Facebook went public in 2012 at a price of $38 per share. Following the IPO, shares of the tech giant struggled for quite some time. Prices went as low as $17. However, year-to-date the stock has gained 39% while surging 184.5% since its listing.
As per a Wall Street Journal report, nearly two dozen analysts have increased their target prices for Facebook following its spectacular earnings report.
CEO and founder Mark Zuckerberg, who owns 15% of Facebook shares, has seen his net worth jump to over $45 billion.
Facebook has gained significant traction in its mobile ad business within a very short span of time. Mobile monetization has increased with a higher number of marketers, continuing investment in new products and robust performance of its newsfeed ads. This combined with its massive user base and its ability to track personal details over time, make it a formidable force in the online ad market.
In addition, Instagram is doing pretty well. Facebook is also propping up its other platforms like Messenger, Whatsapp and Oculus that can help it expand beyond the core business.. Messenger boasts 700 million users while Whatsapp has a user base of 900 million and Instagram has 400 million users. The company also has the Internet.org initiative in place to boost user growth, and thereby Facebook usage in emerging economies like the sub Saharan region.
At present, Facebook sports a Zacks Rank #1 (Strong Buy).
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