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On Monday, Facebook hit another eye-popping milestone. The social media company vaulted above $1 trillion in market capitalization for the first time.
From its debut market cap of $104 billion in May 2012, this is a far cry. It is a feat that has only been achieved by four other US companies: Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), and Alphabet Inc (NASDAQ: GOOGL).
The singular most important factor which raised the stock price was the court ruling in her favour, effectively ending the case brought against the social media company by the US Federal Trade Commission and a union of state attorneys general. The case was summarily dismissed because the prosecutors could not prove Facebook had monopoly over social media has had been previously suggested.
Responding after the ruling, the firm stated, “We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook.” After the ruling, the stock price shot up by over 4% and the shares closed at $355.64.
“We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook, the firm said after receiving the news from the court.
A huge chunk of Facebook’s revenue is derived from individualized adverts that are shown to Facebook and Instagram users. These adverts are known as paid adverts and are used by companies and individuals to increase their reach and visibility (beyond what is possible organically).
The company is also diversifying gradually into hardware development. For examples, it is in the process of building the Portal video-calling device, Oculus virtual-reality headsets and smart glasses, all of which will debut sometime in 2021.
The company suffered colossal revenue losses in 2018 after being hit by a series of scandals. From the Cambridge Analytica scandal to the data leaks and privacy concerns, fake news, the companies share index dropped by 19% and user figures dwindled drastically.
It seems however that the world has moved on from the scandals and Facebook Inc (NASDAQ: FB) has steadily bounced back into the game. Within that time, it has grown its user base. In addition, the average revenue per user has increased and the stock price is well over 90% of what it was at the end of July 2017.
It remains to be seen how quickly the social media giants will reach the $2 trillion market cap; a new milestone for U.S companies set by Apple in August 2020, and recently reached by Microsoft last week.