Ever wondered how Facebook is different from other social networking sites? What makes it reign for over 10 long years while other consumer Internet startups survive for only a few years, wither away, and die? One of the reasons for the growth of this social media platform is its massive audience. Over the years, this company has been able to attract an audience of an estimated 1.55 billion users, which has been non-achievable target for fellow firms. In addition to attracting a mammoth audience, it has been able to consistently grow that audience by introducing new and innovative features on its website. These feature fewer user engagements, snatching even more attention each quarter.
If that’s not rare enough, Facebook has grabbed all this attention while building up an enormously profitable and rapidly growing business around its namesake product. And, to conceal some of its weaknesses, the company has made a smart move by developing several other fruitful products and managing them perfectly. Certainly, it hasn’t been able to do well in its search and e-commerce efforts. But fortunately, these bloopers haven’t affected the company much. Some vigilant media companies believe that Facebook is trying to eat up the Internet in the guise of offering help, but these companies are still yearning to partner with this ace social media platform.
Facebook’s biggest blemish right now is its not-so-popular Internet connectivity efforts in India. If we keep our opinion of the company and its products aside for a moment, Facebook’s course has been very impressive to the investors. So much so that they have rewarded the company with an expensive stock. Today the estimated worth of Facebook is $292 billion, which is a 114x price-to-earnings ratio. Some of this can be attributed to Facebook’s admirable profit margins, and some, because Facebook is still a developing Internet country, which is believed to reach even greater heights. The profit margins of the company have reached a striking 32% this quarter, and the company announced a 45% revenue growth in its third quarter earnings report on Thursday.
The prime reason investors are so optimistic on Facebook is because the company’s next-generation profit sources are ramping up. Afar the staple Facebook platform, Facebook Messenger, WhatsApp, and Instagram have huge audiences. Though these businesses are considered tiny, if not nonexistent, investors expect all of them to become gigantic sources of income for the company in the future. There was a time when analysts asked about the things they perceived as risks, some of the questions being: is Facebook losing the teen audience? Can it work on mobile devices? Will profile privacy worry users? Do the ads actually work? However, Facebook has managed to elude most of these concerns.
Now, the focus of questions has shifted away from concerns to Facebook’s magnificent plans: How large is your app-install business? When will you launch Oculus VR? On a scale of 1-10, to what degree are you ruling mobile advertising? Today, investors are valuing the company at $292 billion and trusting that its future bets will pay off with great results. And why shouldn’t they? Despite the occasional controversy, Facebook has shown it can deliver unrivaled results.
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