And the season of valuations is back. And while we always discuss the Googles, the Apples and the Microsofts, we now have a new entrant to that elite valuations club. Facebook it is, and quite fittingly. The shares of the company have crossed the $100 mark for the first time ever and with this, the company has also achieved a market cap of over $280 billion.
We knew that the company was heading in this direction and indeed, the stock prices came very close on Monday when they reached an all time high of $99.24. The shares slipped back to $98.39 on Monday, only to surge again and reach up to an impressive $102 in today’s trading.
Analysts had already predicted that Facebook will reach the milestone somewhere between 2012 and 2016, with most of the opinion tending towards the latter end. The shares did see a sudden spike in July, when the company announced its second quarter earnings — which were somewhat better than expected — but stayed within the $93-$94 range. However, it seems as if the company’s recent unveiling of search across public posts added the last straw.
The company also managed to capitalize its acquisitions with WhatsApp accounting for almost 800 million monthly active users — 200 million more than the Facebook messenger.
Positive reports by various prominent analyst firms such as Merrill Lynch helped too.
We continue to rate Facebook as a top idea in Internet given mobile exposure and growing time share in the category, improving ad targeting, video traction, Instagram ad ramp, and growth of new platforms. Checks suggest positive trends in 3Q, and we see upside to our revenue estimate with improving ad targeting, video, and Instagram,
So what does it mean for Facebook? While Facebook HQ may play host to parties and perhaps inspiring speeches by the management, that is about it. After all, 100 is just a number and it is quite likely to be business as usual. For investors on the other hand, the $100 sign may come as a sign of stock strength — something you can depend upon the company to rub in at every single investors meeting — and may make them more comfortable while deciding upon putting money in the company.
To look at things from a relative perspective, Facebook arrived at the $100 mark in good time. Except for Google — which jumped to $100 after being opened at $85 — and LinkedIn — which hit a century only 10 months after going public — it took most internet giants at least 5 years to reach the mark. Amazon for example, reached the milestone more than 12 years after its IPO while it took Apple a staggering 34 years, after its share prices jumped to 100 apiece on August 19, 2014 on a split-adjusted basis.
This is business though and not a race and slow and steady holds true here to a certain extent — while it may have taken Apple 34 years to reach the mark, the fact that its shares are currently priced well above $700 seem to validate the statement.
Be that as may, it has been a long journey for Facebook and the 12 quarters that have passed bear testimony to the ups and downs the company has gone through before arriving at this milestone. From debuting on May 18, 2012, a day full of technical hitches for the trading exchange, to having bad periods with litigations and lawsuits, the company has always kept moving forward. They fought, improved, improvised, got their stuff together and tried again and again. And the results are for the whole world to see, in shape of a shining, three digit number right next to Facebook, in the stock exchange.