Facebook worth more than GE, set to catch Amazon
Social media giant now seventh most valuable company in S&P 500.
SAN FRANCIS CO When Facebook CEO Mark Zuckerberg showed up in Midtown Manhattan in May 2012 for a meeting with potential IPO investors, many buttoned-up Wall Street types gathered at the Sheraton Hotel there scoffed at his casual attire.
Some snickered again when Zuckerberg, clad in his trademark hoodie, suggested that Facebook’s total addressable market could be worth hundreds of billions of dollars. To accept that figure for consideration, one had to believe that the social media upstart — which had no video ad products at the time — could steal advertising dollars away from the broadcast and cable television networks.
That number, in fact, echoed language in the company’s original prospectus, where Facebook wrote that “total worldwide advertising spending in 2010 was $588 billion,” in the first paragraph of the document section titled, “Our Market Opportunity.”
The skeptics from New York — America’s advertising capital — could be forgiven for laughing then.
But after the company’s thirdquarter financial report was released late Wednesday, no one who makes a living selling ads is laughing at Zuckerberg now.
Not after Facebook sold more than $1 billion more in advertising during the period than it did in the same quarter a year ago, driving total revenue up 41% to $4.5 billion.
And not after its executives said on an earnings conference call that prices paid per ad were up a mind-blowing 61% yearover-year, driving ad revenue 45% higher (57% on a constant currency basis).
“If you want to shift brand awareness, we can do that,” Facebook COO Sheryl Sandberg said confidently, after reeling off a series of cases in which online marketers had used Facebook ads together with other online and offline promotions to boost both sales and consumer mind-share.
Investors who once scoffed now can’t buy the company’s shares fast enough as Facebook, at $109 a share, is now valued at $306 billion, or nearly three times its IPO valuation.
Yet that figure makes it hard to argue that its shares are a screaming buy right now.
In fact, Facebook is now worth more than Intel and Cisco combined, nearly as much as IBM and Oracle combined, and more than 15 times the valuation of Twitter, its smaller rival in the business of mobile advertising.
The stock’s year-to-date surge makes it look overbought in the near term.
After huge Q3, no one who makes a living selling ads is laughing at CEO Mark Zuckerberg now Investors who once scoffed now can’t buy the company’s shares fast enough as Facebook, at $109 a share, is now valued at $306 billion.