What is Facebook anyway?

It’s a question investors and competitors are wrestling with and to get a sense of the growth potential we need to figure out which companies to compare it with. Is it a social media company, or is it more invested in telecommunications? Is Google the only real competitor with the same global reach and what about the media companies, from whom Facebook is grabbing advertising money and for whom Facebook is a very important distribution channel?

Let’s start out with the core of Facebook: users. Compared to other popular social media Facebook is by far the one with biggest reach with 1.7 billion users. And add to the fact that Facebook owns WhatsApp, Messenger and Instagram and the position as market leaders is inviolable.

monthly-users

What’s remarkable about the development in monthly users is that Facebook keeps growing from a strong position while Twitter for instance are struggling to grow their user base.

twitter-facebook-development

Another industry experiencing challenges from Facebook is media. Facebook is proving a big competitor to media companies in the digital transformation in advertising, as is Google.

Advertising in general is decreasing within media, while digital advertising revenues have stalled. Facebook on the other hand is growing rapidly. Take New York Times’ digital advertising for instance compared to Facebook.

times-facebookSo which company should we compare Facebook with? My answer is Google. Both companies are involved in social media, in news, in virtual reality, in internet projects in non-connected areas of the world, in digital innovation and data.

Looking at how the stocks are traded investors definitely agree that the companies belong in the same category. The companies follow the same trading pattern and with a lot of overlapping business areas the similar pattern is logical.

daily_change_in_stock_price_last_3_months_in_percentage_alphabet_facebook_chartbuilder