Equity prospects

FACEBOOK

Michael Bray, Research Analyst

Price$177.47

52 week high-low$218.62—$123.02

Net yield0.0%

Hist / pros per22.8—20.9

Equity market cap$506,623

Often in the news for the wrong reasons, Facebook is not a company which many would call a success. But from a financial perspective the business has performed incredibly well since its stock market listing in 2012. Operating profits have grown over 46 times during that time as the business has benefitted from the spending shift from traditional advertising to digital advertising.

Through its primacy on social media platforms Instagram and Facebook itself, Facebook has been able to acquire an impressive 21% market share of global digital advertising spend, second only to Google. With Facebook looking to monetise its platforms further, and global digital advertising spend expected to increase by 17% throughout 2019, the business looks well positioned for continued growth.

Growth however isn’t the main source of concern for Facebook - the issues around privacy and data usage of its platform users are a genuine concern for investors. Regulatory oversight looks imminent, with even CEO Mark Zuckerberg recently calling for increased regulation. The form this regulation takes, and the financial implications on the business, are still unknown.

 

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