Facebook joins $300-billion club, beats GE in market cap
Facebook, the 11-year-old social media company founded by Mark Zuckerberg in his Harvard dorm room, surpassed the $300-billion mark in market capitalisation, overtaking General Electric (GE) along the way. Facebook became the seventh most valuable firm in the U.S. on Friday, with market capitalisation touching $303 billion and joined Alphabet, Apple, Microsoft and Amazon among the top 10 ranks.
The surge in market value came on the back of Facebook posting $896 million in third quarter profit on a revenue of $4.5 billion. In comparison, GE reported a profit of $2.51 billion on a revenue of $41.7 billion for the third quarter.
Facebook shares touched a high of $108 after the results valuing the tech giant at a whopping $306 billion, surpassing the about $300-billion market cap of GE. “We had a good quarter and got a lot done,” Mr. Zuckerberg, Facebook CEO, said in a statement.
Mr. Zuckerberg said the company was focussed on innovating and investing for the long term to serve the community and connect the entire world.
The stark contrast in revenue and profits of Facebook and GE notwithstanding, investors are bullish about Facebook’s prospects, especially given its reach and ability to monetise the people’s connections through advertisements. The social media company, which counts more than 1.45 billion active monthly users, got 78 per cent of its advertising revenue from mobile advertising in the third quarter, a 66 per cent jump over the year earlier period.
One statistic that underscores the difference in these two business models is that GE employs more than 300,000 workers, while Facebook’s headcount is just under 12,000.
Facebook crossed the milestone of having one billion people use the service in a single day, Mr. Zuckerberg posted on the site in August.
Facebook had operating earnings of $4.99 billion on $12.5 billion in revenue during 2014, while GE had operating earnings of $26.7 billion on $148.6 billion in revenue last year.
The top three companies with the largest market values are Apple, Alphabet and Microsoft. Amazon, the online retailer, is just ahead of Facebook with market capitalisation of $309 billion. Facebook shares declined 1.5 per cent to $107 on the Nasdaq on Friday valuing it at $303 billion after the company noted that its revenue could be negatively impacted by ad-blocking tools.
However, Facebook still outranked GE’s market cap of $302.4 billion at Friday’s close.
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Source:Thehindu
