Facebook is an online social media and social networking service. Started on 4 February 2004 by Mark Zuckerberg and several peers, it has grown into the number one social media website in the world, with more than 2.2 billion active monthly users as of January 2018. Facebook is headquartered at Menlo Park, California, and employs 25,105 people, as of 31 December 2017.
The website was initially started by Mark Zuckerberg, during his time at Harvard, under the name “thefacebook”. The name itself originates from the student directories which were distributed to all students, known as “face books”. The original website was therefore a digital version of these directories, designed to compile all of them into one. On release, it was only available to students of Harvard, however by March 2004 it had expanded to include Columbia, Stanford, and Yale. It was later opened to the rest of the Ivy League schools, and subsequently all universities in the United States, and Canada. In September 2006 the service was opened to anyone aged 13 or over with a valid email address.
It received its first investment from PayPal founder, Peter Thiel, in July 2004. Over the next few years Facebook grew significantly, with various investments, but the most significant came on 24 October 2007, when Microsoft bought a 1.6% share for $240 million, indicating an implied value of $15 billion.
Service and products
Building on the success of its eponymous product, Facebook has since produced and acquired numerous separate leading services to help it stay competitive in a very aggressive market. These other services are now considered major parts of the Facebook business.
Instagram, purchased on 9 April 2012, for $1 billion, enables people to take photos or videos and customise them with a variety of filters. These can then be shared via a photo feed to followers, or they can be sent directly to friends. Whatsapp, purchased 19 February 2014, for $19 billion, is a popular messaging service where messages can be sent directly to a contact or to groups. A large focus of the service is on the end-to-end encryption of the messages. Messenger, or Facebook Messenger, is the counterpart to the original Facebook service, and was released on 9 August 2011. It is an instant messaging service, which can also be used to send messages to either contacts or groups. The contacts here are taken from users’ Facebook profiles. Finally, Oculus, which was acquired in March 2014 for $2.3 billion, in a cash and stock purchase. Oculus produces virtual reality headsets, such as Oculus Rift. It allows for immersive experiences in video games, video content, and live video calls.
Advertising and data
Most of Facebook’s revenue is generated from ad revenue, however it is generally considered that Facebook’s click through rate is far lower than other advertising locations, at around 0.04%. As of March 2016, Facebook had over three million active advertisers on its website, with the majority being small businesses. This revenue stream has led to a significant amount of controversy in recent years for the company due to its data collection, and subsequent ad targeting. The targeting, and content, of many news stories during the 2016 US presidential election was retrospectively assessed and many considered that Facebook had not done enough to verify content, and determine its true creator. During early 2018 it also transpired that the information of 87 million users was leaked to Cambridge Analytica, a British political consulting firm.
Facebook stock is listed on the NASDAQ and is traded with the symbol FB. It is also part of the NASDAQ-100, the S&P 100, and the S&P 500. Facebook went public on 18 May 2012, which at the time was the largest technology IPO in history – 421,233,615 shares were offered, at a price of $38 a share, raising $16.007 billion. However, during the process there were numerous technical glitches in placing orders, which led to Facebook losing a quarter of its stock value by the end of May 2012. Since then the FB stock price has been generally rising, and all price fluctuations can be seen on Capital.com’s FB charts. There have been certain dips due to news, most recently, as of April 2018, the revelations concerning data security, as well as the monitoring of non-users. However, a convincing congressional hearing involving CEO Mark Zuckerberg led to a rebound in the stock price, and on April 30, 2018 the Facebook share price was 174.03.