Investors of $1,000 in Facebook during its initial public offering, or IPO, have made a healthy profit. A $1,000 investment made on May 18, 2012, the date Facebook went public, would be worth nearly $4,900 as of Oct. 24, 2019, for a total return of around 400%. In the same time frame, by comparison, the S&P 500 earned a total return of around 170%. Facebook’s current share price hovers around $184.
This was made known on Wednesday by Facebook CEO, Mark Zuckerberg, during his testimony before congress. Zuckerberg was questioned on a number of issues, including data privacy and cryptocurrency, as well as race, diversity and civil rights.
Yet despite controversy surrounding the company, Facebook’s stock has shown strength and resilience through the years.
While Facebook’s stock has done well over the years, any individual stock can over- or under perform and past returns do not predict future results. Two major factors that played into Facebook’s success over time are its acquisitions of Instagram in 2012 and WhatsApp in 2014. As legacy Facebook matured, these additions to its app portfolio helped drive user growth to new heights.
During Zuckerberg’s visit to Capitol Hill this week, legislators focused on learning more about Facebook’s plan for a new cryptocurrency, Libra. Specifically, members of the House of Representatives are concerned with how the Libra Association, which is headquartered in Geneva, Switzerland, will be regulated and governed.
Following Zuckerberg’s testimony, lawmakers still weren’t satisfied and questioned whether anything had been accomplished.
Yet despite friction between Zuckerberg and legislators, Facebook’s stock rose 2% the day of the hearing.
The tech giant has also struggled to maintain user engagement, or the amount of time people spend on Facebook. This is due to competition from other social platforms, Michael Wolf, active co-founder and managing director said. That includes networks such as LinkedIn, Snapchat and Twitter.
“When you add Facebook and Facebook Messenger together, Facebook’s overall engagement is up about 2% over the last two years,” Wolf said. “But when you look at Facebook proper, without Messenger, it’s down about 25%. And a lot of this has to do with the fact that Facebook’s own users are using other social networks.”
If you are considering getting into investing, experts, including Warren Buffett, often advise starting with index funds, which hold all of the companies in an index, such as the S&P 500. Because index funds fluctuate with the market and aren’t tied to the performance of a single business, they’re less risky than individual stocks, making them a safer choice for beginners.