Published : Aug. 27, 2013 - 20:08
A Facebook Inc. employee holds a phone running the new Home program at the company’s headquarters in Menlo Park, California. ( Bloomberg)
Facebook Inc.’s market value passed $100 billion amid optimism that the world’s largest social network can bolster sales from mobile advertising.
The stock increased 1.9 percent to $41.34 at the close in New York. Earlier, it touched $41.94, the highest intraday price since Facebook’s first trading day on May 18, 2012. The shares have advanced 55 percent this year, compared with a 16 percent gain in the Standard & Poor’s 500 Index.
The burgeoning market value is a turnabout for Facebook, which slumped as low as $17.73 in September. Concern about Facebook’s ability to sell more ads for wireless devices weighed on the shares after its $16 billion IPO, the largest technology offering on record. In a sign that Chief Executive Officer Mark Zuckerberg is making progress in mobile, Facebook last month said promotions on smartphones and tablets generated 41 percent of quarterly advertising revenue, helped by new marketing tools.
“The market is gaining confidence that Facebook is going to be a viable profit-generating machine in the future,” said Laurence Balter, an analyst at Oracle Investment Research in Fox Island, Washington. “People are checking their Facebook page more and more all the time.”
Facebook shares are now trading at about 180 times earnings. That’s a greater price-to-earnings ratio than all except three companies in the S&P 500, according to data compiled by Bloomberg. A higher multiple can signal that investors think the company may report stronger profit growth in the future.
At a market valuation of $100.7 billion, the Menlo Park, California-based company joins a list of technology companies worth more than $100 billion that includes online retailer Amazon.com Inc., valued at about $130 billion, and chipmaker Intel Corp., which has a market capitalization of about $111 billion. Still, Facebook remains much smaller than iPhone maker Apple Inc., the most valuable U.S. company at more than $450 billion, and Google Inc., with a market capitalization of about $289 billion.
(Bloomberg)