Facebook's $190-bn market cap brings it in IBM's league
25 Jul 2014
Two years after its dismal public offering in May 2012, Facebook's $190 billion has taken it in the league of bellwethers like Coca-Cola and AT&T. Though not a member of the Dow industrials, if it were, it would be larger than two-thirds of that index's 30 members.
Shares of the world's No 1 social network scaled a record high of $76.74 on yesterday after earnings and revenues easily topped analysts' forecasts, vaulting its market value to nearly $194 billion taking it to the 15th spot in the Standard & Poor's 500 benchmark index, just below the $196 billion market cap of International Business Machines Corp.
Reuters quoted Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh as saying a 100-year-old company with real assets versus a company admittedly with virtual assets trading at the same market cap, seemed crazy.
Commentators say the speed of Facebook's rise to mega-cap status was notable, since Apple Inc took three decades to get there and Google took five years.
Facebook is now the 14th most valuable company in the S&P 500, measured by market cap, The Wall Street Journal reported. It exceeds the values of about two-thirds of the 30 stocks in the Dow Jones Industrial Average.
The stock would need to hit $77.94 for the company's market capitalisation to surpass $200 billion.
Facebook stock was up at a new high on better than-expected quarterly results, improving user growth and strong mobile-advertising figures.
The stock rose over 180 per cent in making it the past 12 months, making it the top performer in the S&P 500. Shares more than doubled since Facebook's initial public offering was priced at $38 a share in May 2012.
The social network's mobile push had been the primary driver behind big surge in the stock price. The company introduced ads on its mobile site and app only two years ago, around the time of its IPO and is now locked in a battle with Google Inc for mobile advertising dollars.
About 62 per cent of Facebook's ad revenue now comes from advertising on mobile devices, which this year is expected to outpace newspapers, magazines and radio in the US for the first time, according to eMarketer.
Apple Inc, with a market cap of $600 billion, remains the most valuable company in the world, while five companies in the S&P 500 have market caps above $300 billion and 13 companies have market values above $200 billion.
