The shares of Facebook Inc (NASDAQ:FB) reached an all time high of $81.45 yesterday with nearly 2% improvement in share prices. It is excellent news for the social network considering the recent increase in its photo-sharing platform’s valuation by Citigroup Inc (NYSE:C) reaching $35 billion.
The social network has registered an outstanding 49% increase in its share prices year-to-date against 12% increase in S&P 500. A majority of credit goes to mobile advertisement revenue, which accounted for 66% ad sales in the last quarter against 59% share in the first quarter of fiscal 2014. At the same time, the company has been able to charge three-times more for the adverts with better targeting and high quality video adverts.
According to James Cakmak, Monness Crespi Hardt & Co.,
“While the shares have likely benefited from the recent market rally, we see growing confidence in the monetization prospects of Instagram as an impetus to the recent uptick.”
Facebook Inc (NASDAQ:FB) had a busy year with multiple acquisitions and the social network spent money to generate more revenue streams for the company. It started with $2 billion Oculus Rift acquisition followed by $22 billion investment for the messaging app, WhatsApp. These businesses do hold the potential to become excellent earning sources in future.
In addition to it, Instagram, photo-sharing app of Facebook Inc (NASDAQ:FB), has received a new market valuation of $35 billion from Citigroup Inc (NYSE:C) analyst, Mark May. May further highlighted the higher activity percentage of Instagram user as compared to the micro-blogging site owned by Twitter Inc (NYSE:TWTR). What is more surprising is the amount that Facebook Inc (NASDAQ:FB) CEO, Mark Zuckerberg, paid for the company, $1 billion, and it is an excellent return on investment.
Facebook has a current market cap of $222.49 billion and trading at current P/E ratio of 77.28.
This article has been written by Prakash Pandey.