The trading price of Facebook common stock Class A has been and is likely to continue to be, volatile. The company common stock Class A was sold in May 2012 during the IPO for $38.00 the share (Investor FB, 2017). The stock price has gone from $17.55 at the beginning to $133.50 on December 31, 2016 (Investor FB, 2017). The stock price has fluctuated in the range of $54.71 to $80.02 from the beginning to the end of FY14, to $104 at the end of FY15 to $115.05 by the end of FY16. According to some factors considered in the Facebook ‘Form 10-K, the trading price of the common stock Class A could significantly vary in response to numerous factors, many of which are beyond the control of the organization (Yahoo Finance, 2017). Like fluctuation …show more content…
The company required that any items or behaviors that did not comply with the code of conduct of the company should be referred to file a complaint within 120 days to the Security and Exchange Commission (SEC) (Investor FB, 2017).
Facebook’ Personnel is anticipated to use their judgment to act, in all ways and all the times. Their Personnel should avoid actual any conflicts of interest. Facebook encourages its personnel to be active in the industry and civic association (Investor FB, 2017). Nevertheless, those who serve on the boards of advisory or boards of directors of other company need prior approval to avoid conflict committee (Investor FB, 2017). 2% of the total outstanding shares of a public traded company is required with no approval from Facebook. Anything greater needs approval (Investor FB, 2017). All personnel must comply with all anti-corruption laws of the country there are operating at.
5. Would you invest in this company based on your analysis? Why or why not?
Debt: With the increased of investment from the industry, Facebook’ liquid assets have significantly increased on the equity account since the company went public in 2012, which lower the debt ratio each year.
Gross Profit and Revenue: Facebook has made a large investment in assets in the recent years this investment on the assets has helped Facebook to increase its cost of goods sold and to generate more revenue to the firm. The increase of the revenue resulted in an increase
An audit from an outside organization is usually a good idea. This outside sources can provide the much needed unbiased opinion of the standard practices. The evaluation of the internal and external controls of an organization is necessary and should be monitored regularly. Facebook has become an outlet that is affordable and effective. By using Facebook, consumers are posting information that companies need to develop brand awareness and improve brand material (Baker, Brison & Byon, 2013). Facebook is not the external source that the Better Business Bureau hired to monitor their controls but Facebook is disguised as a rater of materials. The concept of sharing in the moment is very effective and consumers/friends monitor the verbiage on Facebook. If something is negative, usually one thinks twice before making the same
handle business. Facebook is one of the main social media cites around the world. Society
Facebook is a very greedy company. The initial public offering or IPO for Facebook was a joke to them because they use it to gain money their personal use, pocketing it. The greed shown is a whole new way of running a company. They made the
The privacy compliance recommends that companies like Facebook should adopt a comprehensive privacy program that is reasonably designed to protect the privacy and security to prevent predictable risks. Another important idea is to abide by the Federal Trade Commission’s rules about keeping their advertising from being misleading and deceptive. Also, an opt-in consent form must be provided to the consumers that their data will be kept private. Overall, any type of changes a company possesses should be disclosed clearly to the
The question every parent is constantly pondering is "what is my child thinking." It is a question that children don't normally give an answer. Parents have to be observant to even be in the ballpark. Many parents have began to use social media to spy on their kids, but as Patrick White has pointed out in his essay, "Facebook: Watching the Watchers" it is backfiring, but it is changing the family dynamics. In "Facebook: Watching the Watchers", Patrick White writes "The site now bridges the chasm once rarely crossed between student life and family life by offering a window into both lives for children and parents (521)."
Since 2016, operating income decreased while net income increased. Operating income decreased from 4,116 to 3,760. Net income increased from 2,181 to 2,244. In 2016, total operating revenues increased from 19,820 to 20,425 which is most likely because of an increase in their research and development. As for operating expenses, jet fuel prices are a huge factor because of fluctuating costs. In 2016, operating expenses increased from 15,704 to 16,655.
As it is showed in Exhibit 3, Facebook’s estimated value/share is $32.44 using Discounted Cash Flow analysis. The price from the price talk is $38, which was raised from around $28 to $35 to $34 to $38 per share because of the overwhelming demand from investors. And the price talk is 17% higher than the intrinsic value.
The intrinsic value of Facebook stock was very difficult to find, since the company is relatively new and has been growing at an extreme rate. Based on the most recent sale of Facebook stock via a private transaction the per share price was $44 in March. However, based on the DCF analysis by professor Aswath Damodaran the intrinsic value of a single Facebook share would be $32.44. The problem is whenever using DCF analysis; the analysis is very sensitive to all assumptions uses, which were plenty in the case of Facebook. The price talk from underwriters varied immensely within the time from of February when the Red Herring was filed, all the way to May. At the very beginning, price talks were anywhere from $20 – mid $30’s. They were set to offer 337,415,352 shares. As the broader market continued in bullish trend and momentum for the Facebook IPO became greater. Price talks now shifted to $28-$35 range. Knowing that demand for the stock was said to be growing it was noted that many IPO are priced conservative to leave room for a pop on the first day of trading. On May 11 CNBC made a statement along the lines that demand was much greater than supply for the stock. Shortly after on May 14, the price talks had now moved to $34-$38 range and now offering 421,233,615 shares, the additional shares were all of insiders. This would set the companies valuation at
Third, for the further development, Facebook raises its reputation and amplifies its brand value. More people get to know the company and join in the Facebook. That is to say, Facebook attracts more users and expands the market share.
Facebook has an array of information assets that it owns by collecting information on its users.
Even though the company showcased lower than expected revenue, the company remains profitable which can be measured with the Return on Assets (ROA) ratio. The software/infrastructure industry has an average ROA of 8.18% compared to F5’s ROA of 15.9%. This indicates that for each dollar invested in assets, the company generates on average 15.9 cents in profit. The Return on Sales (ROS) of a company allows investors to see how much profit the company is generating per dollar of sales. F5’s ROS is 18.3% which means that they earn 18.3 cents for every revenue dollar resulted in profit. F5’s asset turnover is 0.865 compared to the industry’s average of 0.41 which dictates that they generate 0.865 in revenue for every dollar invested in assets. In order to do an even deeper analysis for F5, I looked at the Gross Profit Margin (GP %) and found that F5’s Gross Margin is 83.33% compared to the industry’s average of 63.73 percent. This means F5 earns 83 cents on the dollar in gross margin.
The valuation and technique used to compute Facebook 's Initial Public Offering comprised of various target and subjective components to decide the best gauge or the reasonable estimation of their Class B basic stock. A few elements considered were late private stock deal exchanges; verifiable money related results, assessed patterns, and prospects for Facebook 's future budgetary execution. Extra elements were the execution and business sector position about contenders and comparative traded on an open market organizations. Likewise the monetary and focused environment, incorporating the business in which Facebook works; and free outsider valuations.
Facebook has a high valuation of $75-100 billion which is difficult to justify. After the first quarter, the company failed to produce financials which caused stock prices to plummet. This is not good in terms of attracting new investors. In addition, customers often complain of bugs and problems when interacting online
Facebook is involved in a serious controversy in the United States. And last but not least they are being accused of nothing less than ideologically manipulate the news that serves its users , all this is happening on the campaign trail, so the whole thing takes on an even greater dimension that already itself has.
In today’s technology driven society, information systems are changing the financial markets. Modern day electronic trading has given direct market access to retail traders and investors. Stock trading used to require face to face trading or calling your broker over the phone. The market was illiquid in lots of areas such as options, short selling, and smaller cap stocks. The transaction costs were also costly. Improvements to electronic trading brought the market faster order executions, liquidity due to the increase in trades and frequency of trades, reduction of transaction costs, more competition, smaller bid-ask spreads, and easier accessibility. Advancements in information systems leveled the playing field whereas most trader and investors can now received data and news at the approximately the same time. It also made possible for the average retail trader or investor to trade from home or even on the go on a mobile device. There are many electronic information systems that have improved electronic trading and have opened the stock market to new possibilities. This research paper will examine some of the information systems that have given us the modern day electronic trading in financial markets and the highly debated high frequency trading (HFT).