With a market cap of $620 billion USD and over 2.37 billion active users worldwide there is no doubt Facebook is one of the most profound companies across the globe. In recent articles, we have looked at the current world events such as the Effect of the Coronavirus on Apple’s revenue and how new legislation is effecting the BNPL industry. But in order to make smart investment decisions, it helps to look back on history and learn from missed opportunity. Today we look at the possibility of investing in Facebook the same time you first joined less than a decade ago.
How much was the return on investment?
For Facebook, 2012 holds significance for two reasons : Facebook reached 1 billion active users worldwide and Facebook listed an IPO at $38 USD. As one of the most anticipated tech IPO’s in the USA’s history, there’s no doubt many investors were aware of the opportunity. With speculation that the company was not going to make enough revenue, many investors saw risk in Facebook’s future. I joined Facebook in 2013 with the stock price at that time bouncing around the $25 mark. If I decided to purchase shares in 2013 – the exact same time as joining : my shares would now be worth $217 each today. Say I spent $10,000 on these shares at $25 – I would have 400 shares worth a total of $86,800 today.
If we take this strategy for many things we join across social media, almost all of them would have generated you a nice capital gain. But not exactly, in fact if you invested in Twitter’s IPO at the exact same price you would be at a loss. This is the risk investors take when investing in social media platforms around the same time they start to hear about them publicly.
As we have already mentioned in the $800 Amazon investment article , most investors would have sold their shares at/before the big dip in 2018 when Facebook lost 35% of its value in under a month. However, we are talking about investing in something that was growing so rapidly around us. Buying even a small portion of shares after IPO would have still made a 400% increase in stock price. The moral of the story is to be open to opportunities such as Facebook, as they grew within the public eye their share price slowly followed till this date.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.