Facebook’s market capitalisation topped $200bn for the first time on Monday, beating rival Google in the time it took since going public to reach the symbolic figure.
As well as outstripping the valuation of much older technology companies including IBM, Intel and Oracle, the social network is now worth more than Toyota, Coca-Cola and Bank of America, and stands on a par with HSBC.
The milestone came as Facebook revealed growing momentum in its video business, giving publishers extra tools such as a YouTube-style view count as it chases a lucrative new stream of advertising revenue.
Wall Street investors see Facebook, whose main app consistently ranks as the most popular for smartphones of all varieties, as a way to tap into the growth of mobiles without having to place what they see as a riskier bet on the makers of devices, such as Apple or Samsung Electronics.
This year’s stock market rally can also be seen as an endorsement of the leadership of chief executive Mark Zuckerberg, who has spent billions of dollars to acquire any start-up threatening to undermine Facebook’s leadership in social media, including Instagram and WhatsApp Messenger.
However, even as his strategy of splitting Facebook into a portfolio of apps wins over investors, it continues to frustrate some consumers, tens of thousands of whom have protested at Facebook’s recent decision to break the chat and messaging function out from its main mobile app.
Fewer than two and a half years after what many saw as a troubled stock market debut at $38 per share, Facebook’s shares rose 0.8 per cent on Monday to close at $77.89, giving it a market capitalisation of $200.9bn.
That leaves Facebook worth almost exactly half of Google, which closed up 0.6 per cent at $601.63 at a valuation of $400.4bn on Monday.
The two tech companies are fierce rivals in online advertising and vie for the title of the internet’s most popular destination, across suites of competing apps and services ranging from photo and video sharing and chat to search. Both have raced to adapt their advertising businesses for mobile phones in the past two years, as consumers’ attention shifts from the web to apps.
In their most recent quarters, Google’s revenues, net of traffic acquisition costs and other distributions to partners, were more than four times larger than Facebook’s. However, Facebook is growing more than twice as fast, at a rate of 61 per cent.
After its September 2004 IPO, Google’s valuation reached $200bn in October 2007 but fell back sharply, along with the wider market, during 2008. It took until late December 2009 for it to recover to those levels but did not consistently rise higher until mid-2012. Over the past two years, Google’s valuation has increased by about 75 per cent, while Facebook’s has leapt more than 330 per cent.
“Facebook has many drivers at this point in time that are all helping to drive rapid revenue growth and even better profit expansion – something even Google hasn’t done,” said Brian Wieser, analyst with Pivotal Research, as its range of customers expands to include both big brands and small business, as well as momentum in ads for video and mobile apps. “The standout comparison that I see is Facebook’s focus and financial discipline appears to be superior to Google’s.”
Mr Wieser notes that even as Facebook grows faster, the social network’s margins are higher than Google’s, as the search company pumps hundreds of millions of dollars into more speculative, long-range initiatives such as self-driving cars, drone delivery services and extending human lifespan. “All in, it’s a pretty compelling growth story that investors really only came to appreciate in the last year,” he said.
As a company blogpost touted more than 1bn views of videos on its site every day, Facebook on Monday repeated a phrase that has become ubiquitous in its communications and symbolic of its ambition: “And we’re just getting started.”
Source: ft.com
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