Facebook is the fastest S&P 500 company to break U$250 billion in market cap, doing in slightly over two years what Google took eight years to achieve.
Monday’s 2.4 percent climb to a record close sealed it for Facebook, making its less than stellar stock market debut in 2012 seem like ages ago.
Bloomberg thinks Facebook’s rapid ascent may indicate investor confidence that the company will continue to increase mobile advertising sales on its application and others.
But the gain also reflects froth in tech stocks. The NASDAQ Internet Index has almost doubled since Facebook went public.
“When you see stocks with these high multiples, it shows you the market’s comfort in the longer-term growth story,” said Paul Sweeney, an analyst at Bloomberg Intelligence.
“Investors think Facebook is more valuable than the average NASDAQ stock.”
The company’s quick rise to US$90.10 a share on Monday came in stark contrast to to its May 18, 2012 listing when it closed just 23 US cents above the IPO price and down US$3.82 from its value at the opening bell.
The debut was widely panned by the media.
Still, it gave Facebook an IPO valuation of US$104.2 billion, so the stock didn’t have to climb as far as some other companies did to reach US$250 billion.
With a market value of US$253 billion, Facebook is now the ninth biggest company in the S&P 500 — bigger than Wal-Mart Stores Inc. and Procter & Gamble Co., which took decades to become as valuable.
Facebook’s revenue from advertising — from which the company gets more than 90 percent of its sales — increased 46 percent to US$3.32 billion in the first quarter from a year earlier.
More than two-thirds of that came from mobile ad sales. Analysts estimate that sales rose 37 in the second quarter, according to data compiled by Bloomberg.
– Contact us at [email protected]