Facebook (FB)


Facebook Inc was founded in 2004 as a social networking company. Starting out principally as an enterprise providing a platform where friends could keep in touch and engage with one another, the company has been able to take social networking into a new level, beating out companies like MySpace which had hitherto dominated this sphere. Facebook presently provides a platform for people to connect and share information as well as diverse media content using personal computers and more recently, mobile devices.

Facebook has been able to monetize its social media model by offering opportunities for companies and marketers to develop a loyal following, and also opportunities for developers to offer products that enable a more pleasurable social networking experience.

Presently, Facebook Inc offers the following products:

  1. The Facebook social media platform, which represents the company’s flagship product. Available for the PC and mobile devices, this platform provides an avenue for users to connect, communicate, share and access information on a global scale.
  2. The Facebook Messenger is a messaging application which enables mobile-to-mobile communication between iOS, Android and Windows phone devices. Instagram is a picture sharing platform which allows its users to share photos and video content with each other. It is also available as a mobile app.
  3. WhatsApp, an instant messaging platform which now incorporates a free instant calling feature, was purchased by FB at a cost of $19bn. This acquisition helped bolster the consumer base available to the company. The WhatsApp Messenger works as a cross-platform messaging application for mobile devices, allowing messaging on Android devices, iOS, Windows Phones and BlackBerry devices.

Presently, the company has close to 1billion active users daily.

Interesting Facts About Facebook

When Facebook launched its IPO in 2012, the concern for industry watchers was whether Facebook would be able to capitalize on the increasing mobile usage of its users and monetize the traffic accordingly. Within two years, Facebook has been able to answer these questions in dramatic style, announcing an increase in the number of its mobile platform users and a corresponding increase in its mobile ads revenue.

Facebook’s stock has responded accordingly, hitting an all-time high of $110.65 per share representing a tripling of its listing price on the Nasdaq. Part of what has led to an vast increase in the mobile usage of Facebook is the rise of political activism using social media as a tool, where connectivity on mobile has enabled access to news and information in places which are too volatile or inaccessible to traditional electronic news media. This has led to a vast increase in the usage of Facebook without the company spending money to acquire users.

Facebook has also launched an ambitious campaign to provide Internet access to the most remote places on the planet by launching a satellite into space in 2016. According to Mark Zuckerberg, the “Internet from space” concept will beam shared internet access across parts of Africa that are unconnected to the world wide web. This is to add to its Internet.org concept already running in Indonesia, Kenya, India and Colombia.

What Lies Ahead for Facebook Investors?

Facebook’s success lies in how much of its 1 billion daily users get to pay for some service offered by Facebook, and how many of them get to do so using their mobile devices. For Facebook, it is all about mobile engagement and that is what has guided the acquisition of Instagram and Whatsapp. As at July 2015, Fortune reported that Facebook’s ads revenue from mobile users had risen to $2.9bn. Latest data from Statista.com as at November 2015 showed that Facebook’s revenues from advertising were now almost exclusively from mobile ads, enabling a 41% increase in revenues and a doubling of Facebook’s expenditure on research and development. Facebook reports that its ad revenues from mobile are now at 78%.

Mobile ads will no doubt continue to play a huge role in the earnings of Facebook, and will have an impact on how investors view the stock. It is expected that Facebook’s universal internet access project will bring in even more people into the Facebook net and lead to increased revenues for the company and of course, better dividends for its investors.