Four years ago Wednesday, Facebook Inc (FB) launched its IPO. It was a disaster, and FB stock had troubles for quite a while, until the technology caught up with the vision.
Now, Facebook stock is up over 200% since its IPO, and there’s lots of blue sky for FB to grow.
Remember, in its first year of trading, FB stock was at 18 and many thought that wasn’t the bottom. Now, at 117, analysts are looking at a much different company.
The most exciting thing Facebook brought to the table when it went public was a massive user base. No one particularly cared that the base was free users. It was massive.
Even minimally successful sales would mean serious revenue. And plenty of advertisers were clamoring for a shot at the FB faithful.
But results were not encouraging. Many big advertisers pulled campaigns after seeing little to move the meter with Facebook audiences.
How FB Stock Beat the Odds
However, the biggest challenge wasn’t coming from FB — it was a structural problem with the internet. Bandwidth was inconsistent and in most places, it was pretty slow, if existent. And to a greater degree, mobile was in the same boat, if not a worse one.
But CEO Mark Zukerberg stuck to his vision and continued to build out capacity, storage, security and features. He added more social media sites to target new demographics.
Analysts weren’t bullish on all this spending without much of an idea how to make advertisers happy and sales grow.
Then the new wave of connectivity happened. First, it was the growth of bandwidth. That meant people could spend more time doing more things on FB platforms. Advertisers started returning.
The next big step was when mobile became fast and available for almost anyone. This transformed FB’s business. According to an article in the International Business Times, last year mobile ads generated 80% of FB’s revenues. And its audience is now half the world’s internet users.
But FB stock has much more than just Facebook going for it. Its other social media companies WhatsApp and Instagram are attracting a whole new group of users … around the world. It also has a start-up software firm that runs on secure servers to maintain safe data storage.
Its biggest departure from its current social media focus is Oculus Rift, a virtual reality headset. Digital consulting firm Digi-Capital projects that the VR market will hit $150 billion by 2020. It will likely hit around $1 billion in 2016. Most of that massive growth between now and 4 years will be in hardware, exactly where Facebook is positioned with OculusRift.
And as VR becomes ubiquitous, it will migrate beyond the gaming sector, into family (and friend) videos. And that means more content for social media.
This social media phenom has become an industry leader over the last four years, and FB stock is here to stay long-term.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
