Today Facebook ended normal trading with a market valuation of $100.6 billion. The milestone capped a long return to form for Facebook, after a botched IPO and mobile concerns led investors to unload their shares during its first year as a public entity.
Facebook traded as low as $17.55 on September 4, 2012. This makes the achievement of reaching the $100 billion mark today more fun, as it comes almost a year after the company was at its lowest recorded ebb. Facebook has recovered $58 billion in market capitalization since last fall, more than doubling in value since its 52-week low.
Facebook is in fact quite close to setting an all-time high. As TechCrunch reported on the day of the company’s IPO, “Facebook shares opened at $42.05, a 10.5 percent increase from its final price last night at $38.”
Today, Facebook closed at $41.34, up 1.95 percent during normal trading. In after-hours trading, the company is up a fraction. However, Facebook traded as high as $41.94, pennies from an all-time high.
What is causing Facebook’s long boom? The precise opposite of what dragged it down in the first place. The company has proven that it can monetize mobile usage at high levels, driving revenue growth. Facebook has consistently expanded its user base as well, demonstrating functional longevity.
It’s a good moment for Facebook. However, the firm is incredibly richly valued, which might make it ripe for a market correction, or investor profit taking. Google Finance estimates its trailing 12-month price-earnings ratio to be 207.87. Yahoo Finance lists a slightly smaller figure: 187.06. Investors are valuing Facebook as a growth company.
Any slip in its next-quarter earnings report — anything that might indicate that Facebook’s revenue growth will slow — and Facebook could find itself trading a lower multiple. Still, today was a good one for Facebook, snagging 2 percent more value in a day of generally negative trading.
Momentum alone might carry the company to an all-time high tomorrow.
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