Facebook Stock - Then and Now
Facebook Stock — Then (2012) and Now (2020). Do you remember when Facebook (FB) made its debut on the NASDAQ? Long, Long ago in May 2012? I do. I also happened to be running a blog at the time too. When Facebook debuted the biggest questions facing it were all about how it was going to monetize its service and actually make some money and thereby generate returns for its investors.
The First Trading Day
When FB opened on May 17, 2012, the first share was traded for $42.05 and 573M shares were exchanged that day. To this day, FB has never traded that many shares in a single day since! It closed that day at $38.23.
If you had gone long that day on FB share you would have felt like an ass the rest of the year and well into 2013. In fact it took until Aug 5, 2013 for it to close above 38.23. But looking back with the benefit of the hindsight we have today, we SHOULD HAVE LOADED UP! Borrowed against our car, house, and health and borrowed from our friends, family, and enemies! On Friday, October 9, 2020 shares closed at 264.45. A nice 27.35% annual return!
Blog Site 1.0
“Facebook is finally cracking under the pressure of the social network called the Stock Market”
I then included this snazzy screen shot from yahoo finance using some old archaic method that saved it in some horrible resolution! (Apologies!)
They were facing all sorts of headwinds since deputing on the stock market
- How are going to make it work on mobile devices
- (Remember back in 2012 they were still primarily used on desktops and laptops!!)
- How are they going to monetize their service?
- If they sell ad space will users stop using their service?
- How do you sell ad space on mobile platforms?
- Facebook was considering creating their own mobile phone! How could they pull this off and be successful?
Here was some commentary based on a May 2012 News Article from CNN Money
Analyst Laura Martin of Needham & Co. said investors are worried that Facebook plans to develop its own smart phone, perhaps through an acquisition, in order to deal with its perceived “mobile problems.”
“One thing Facebook management is going to have to get used to is that every decision they make is going to be judged every day in the markets,” said Martin. “The creation of a smart phone is something that the markets are telling them is value destructive.”
Still, Martin said she’s maintaining her $40 price target on the stock, as well as her “buy” recommendation, and doesn’t intend to change it. She might make a change if an acquisition is announced though.
Some people questioned whether Facebook was ever worth anywhere near the IPO price. While the company is profitable, the $107 billion market value based on that offering price was more than 100 times its most recent full-year earnings, making it far pricier than most other stocks.
Would you pay to use Facebook?
With the latest slide, the company’s market value now stands about $60 billion, still a very pricey 60 times earnings.
Now, A Force to be Reckoned With
Facebook Stock – Then and Now are two completely different animals. We know the answers to nearly all the questions and headwinds FB faced back when it debuted on the market some 8 years ago. Not only has it answered the question but has become the de facto standard for social media, an advertising powerhouse, and a political force. Their algorithms and user experience have in many ways change the human experience – and not always in a good way.
Debate all we want about the good and evil of Facebook it has made one hell of an investment. We should have all been loading up on it.
Herein lies the lesson – Follow your Convictions! There will be days when your investments will not perform well. When you will second guess yourself; but have the conviction to stand tall and see through the headwinds, media noise, and headlines that make you fear your previous convictions.
Just Because You Bought Today and You’re Wrong Tomorrow Doesn’t Mean You’ll be Wrong in 10 Years.
The first thing we recognize is my improved ability to take a screen shot in 2020. Yes, thank-you!!
But look at how the numbers have changed. Here I’ll post the 2012 screen below again so you don’t have to keep going up and down.
Pretty impressive numbers aren’t they. Look at how EPS, P/E have improved and that Market Cap has surged to within striking distance of 1T dollars.
This why investors pay top dollar for quality growth stocks! Sometimes they DELIVER!
Back in May 2012 if you had loaded up on FB stock the media and your friends would have thought you’re an idiot. But today, if you still hold those shares, you’re a freakin’ genius!!
Disclaimer:
Come on you knew this was coming and I needed to include it. This article is only about an old observation I made back in 2012 when Facebook deputed on the NASDAQ. THIS IS NOT A RECOMMENDATION TO BUY OR SELL FB STOCK. Do your own research first before buying and selling stocks.
Our top recommendation is outlined in our Four Pillars for Investing Success wherein we don’t recommend owning any individual stocks but rather index ETFs. If you want a simple solution read about Getting Rich by Keeping it Super Simple here.
I don’t own any FB stock at this time; or know anyone within my circle of influence that does.
