Facebook, Inc. (NASDAQ:FB) CEO recently took a drubbing by America’s Congresspeople. Some thought it boded poorly for the internet giant. There were rumors of customer defections and fears that privacy issues would sink the company. The stock dropped from a February high of $193 to a March low of $152 – down more than 20%.
But by mid-May Facebook had recovered to $186, and the concerns seemed largely ignored- as they should be.
Facebook is much more than Facebook. As of January, 2018 Facebook had 2.1M monthly active users, the most of all social media sites. But Facebook also owns the second most popular site WhatsApp with 1.3M MAUs, the third most popular site Facebook Messenger with 1.2M MAUs, and the fifth most popular site Instagram with 800K MAUs. Notably, Instagram is 5 times larger than Snapchat. Meanwhile, Facebook Stories, which just started in 2017 is now almost as big as Snapchat and surely in the top 10. In other words, 5 of the top 10 social media sites are owned by Facebook, and they totally dominate the marketplace.
Facebook paid $1B for Instagram in 2012 even though it had no revenues. Today, 1/3 of ALL USA mobile users use Instagram, 15 million businesses are registered on Instagram. The $3.6B revenues seen in 2017 have jumped up to revenue projections for 2018 of $6.8B.
Facebook Expands Globally
Facebook paid $19B for WhatsApp in 2014, when it had just $15M in revenues. In 2015, WhatsApp had 1 billion users. WhatsApp has become the most used app on the planet – even though not a top app in the USA where mobile texting is generally free. Where texting is expensive (for example, in India), over 90% of mobile users utilize WhatsApp, and users typically send over 1,000 messages/month. In 2017, that rose to $1B, and in 2018 it will cross over $2B.
Facebook is smart at realizing new ways people can use the platform. The tech whiz team adds functionality constantly, exponentially growing the user base. The empire is untouchable in its social media market domination. After all, it has proven more than any other platform (think Snapchat and Twitter) that it can monetize users into revenues and profits. Facebook’s leadership is constantly in touch with trends and keeps making social media more relevant in the life of every person.
Unless you somehow think time will go backward, you have to recognize that social media – like all other personal technology – is constantly becoming more useful. It is gaining greater adoption, and more usage. Businesses are using social media to reach customers, thus paying for access, like they once did for newspapers, radio, television and then web sites.
Just the Beginning…
Facebook is just getting started, much like Amazon did 20 years ago. That’s the very Amazon that dominates online e-commerce sales. If you bought Amazon on the IPO 21 years ago (May, 2017), your investment would have risen from $18/share to $1,700 – a nearly 1,000-fold increase. For context, Facebook’s IPO was 6 years ago (May, 2012) at $38 – 6 years later it is worth $185, almost a 5-fold increase. Not bad. But if Facebook performs like Amazon in the next 14 years it could rise to $3,600 – that marks an almost 20x gain.
That’s why you should ignore short–term blips like the Congressional investigation and realize that you, and everyone else, is a Facebook customer. Bottom line, you want to share in that growth by being a Facebook shareholder.