Pages

Facebook massive initial public offering and a roller coaster ride towards growth; A great lesson for technology stock investors

When naming the top bluest chip stock people should buy, almost any experienced trader would list down Facebook's name. The company has undoubtedly revolutionized internet and social media and has the most unique and impenetrable revenue model. With such impact and revenues, Facebook's share in the last few years have sky rocketed and has been on an upward curve for a long time. However, was this always the case?

Well, it was quite the opposite, about ten years ago when Facebook first went public. For it's IPO, the company sold off one share for 38 US Dollars, which sure is a big number and is still one of the highest IPO the world of tech.

In its Initial Public Offering round, the tech giant raised a total of 16 billion dollars and valued their company at 104 billion dollars, considering the time period, this was quite a significant valuation.

Though it was a stock with great potential, Facebook on its first day closed at the same price it started with, and this hushed off investors that were trying to make a quick buck thus many started selling the stock and demand decreased, pulling down the stock prices significantly.

This constant devaluation went on for months, and Facebook soon lost half of what it was worth in its IPO, however a revival came soon enough.

People and particularly those belonging to the technology sector started understanding the scale of business and capabilities that Facebook possessed. The business model also became a common talk and share prices started to rise once again.

Once massive revenues started coming in and the photo sharing application Instagram was acquired, things became even better for the Facebook in the stock market.

As of now the company has grown its share price by 433 percent to that of its initial public offering, quite the growth right?

According to calculations if a person would have bought Facebook share at its IPO and kept holding onto it, they would have quintupled their investment and earn a return of 18.9 percent. This shows that investing is never a short term game, and that your money will always earn more, if you put it to the right place and have a little patience. The chart below from Statista shows Facebook's turbulent decade on the stock market.


Read next: Meta Provides A Realistic Perspective About The Metaverse And How Much Progress Is Being Made For The Shift

No comments: