Technology Sector Investors: The Faces Behind Facebook

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In the current age of the technology sector, there are owners and founders just as well known as their companies. Their names are synonymous with what they do. Take Facebook for example, a company that had a movie created after them called “The Social Network.” Mark Zuckerberg’s name has become as related to success as Bill Gates, both of them creating and founding world changing technology companies. One amazing thing about Facebook and Zuckerberg is the amount of investment he has in his own company.

Facebook Stock

Facebook is major network that people spend time on every day. The average user spends around 50 minutes on the website. This is a tremendous amount of time in our fast paced low attention span society. With that, advertisers have come into the fold to do as they always do, capitalize on a body of users to sell things with. Facebook has become one of the biggest companies in the industry because of this fact.

At around the latter half of 2016, the Facebook stock price was trending around $130, well over the original IPO it opened up with in 2012. Some analysts wouldn’t be surprised to see Facebook stock become a $1,000 a share by the mid 2020s.  Facebook stock has grown at an average annual rate of 32% since its IPO.

CEO and founder Mark Zuckerberg has made it his mission to stay in control of the company and be the guiding principle behind where the company is headed. This is great for shareholders as a dedicated CEO like this can do amazing things as he already has. Public companies led by their founders can be some of the best investments out there.

Growth Opportunity

Facebook is a bastion of growth and progress. At the start of 2016 in the first quarter, revenue jumped up to 52% compared to the previous year at $5.4 billion. Net income managed to hit $1.5 billion with an EPS of 77.

Facebook is considered a two-sided market. That means the subsidy side is everyone who uses the service but don’t pay for it, the users. Facebook has grown to a record 1.65 billion monthly visitors. The big factor and key statistic here is that 1.5 billion of those users are using Facebook only on mobile devices. That’s a 20 percent increase since 2015. This number amounts to a lot of mobile advertising dollars, a huge market.

Already over 80% of Facebook revenue is derived from mobile advertising, something they had no market share of when they first went public in 2012.  Facebook saw an opportunity in that market and when it went public it capitalized on it.

Achieving Financial Goals

Facebook’s mobile advertising is expected to top $18.5 million by the end of 2016, that’s around 18% of the entire $102.5 billion mobile advertising market. Facebook is in a position where they control a substantial amount of the market and can push forward where they want to be. They haven’t even begun to target their other markets they own that exist in Messenger, Instagram and WhatsApp.

Facebook also has the relatively new acquisition of Oculus VR, a market that really hasn’t even opened up yet. The virtual and augmented reality place is going to revolutionize and create advertising and marketing everywhere. Facebook has poised itself through its $2 billion acquisition to be a leader in this market.

Founder Influence

Mark Zuckerberg is a unique personality that has made a unique company. He does not want to be impeded on in terms of his progress. The areas he doesn’t want to deal with or knows his limitations in, is given to other executives to control such as sales, marketing and other issues. While he has taken his company public, investors are more privy to the inner financial workings on the company.

Zuckerberg uses his four million Facebook class A shares and 468 million class B shares to control a 60% voting control in his company. The decision for him to stay in control is simple. He is the creator and main driving force behind the company. It was due to him all along the way that made the company possible and made the right deals to get to its current financial standing.

While investors may know what’s good for some companies, they wouldn’t have made the correct and often difficult choices that Zuckerberg had to make. By not selling the company to Yahoo for $1 billion, waiting to monetize mobile users and acquiring Instagram for $1 billion, he’s set himself as the industry leader.

 

Danielle Richardson has a career in market research but her passion actually lies with investments, particularly the stock market. On her free weekends, particularly Winter afternoons, Danielle sits down to write an article or two. These appear around the web on well-read and liked blogs.

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