Despite a 0.49% decline on Friday, which saw Facebook stock close at $195.85, it is quite probable that the social media giant’s stock will break the key $200 barrier this week. Having hit an all-time high on Thursday, reaching $196.05 a share, Facebook fell on Friday along with other tech and media shares. However, with $200 in their sights, here are three reasons Facebook (FB, Financial) is hitting new heights:
- Facebook users are loyal
It was only three months ago that new of the Cambridge Analytica data breach broke, and its impact upon its users has been minimal. Despite Facebook stock plummeting to below $150 in the immediate aftermath of the story, Facebook has not suffered any drop in new users or a mass deletion of accounts from existing users. Facebook users are loyal and the markets are very forgiving.
2. The Instagram effect
When Facebook purchased Instagram for $1 billion back in 2012, the markets were taken aback by the surprise purchase of the photo sharing app. The $1 billion paid by Facebook seems an absolute bargain, however, when you consider the $19 billion Facebook paid to acquire WhatsApp in 2017 and the success that Instagram is proving to be. Twenty-seven percent of Facebook’s revenue growth in 2018 will come from Instagram, while ad revenue from Instagram is expected to reach $8.9 billion this year, a full 100% increase from 2017. Instagram’s ad-friendly platform and growing popularity among the cash-rich teen market make it a brand's marketing dream.
3. The rise of tech and media shares
It’s no coincidence that Facebook’s rise to all-time highs coincides with record highs for U.S. stocks. Despite declines on Friday, the Dow, S&P 500 and Nasdaq are all at record highs. Companies are shrugging off talk of a trade war between the U.S. and China, the world’s two largest economies.
Instead, companies have been boosted by retail sales rising more than twice market estimates and by consumer spending improving due to record-low unemployment. U.S. stocks are rising as a result of strong U.S. data, and Facebook is no exception.
