Facebook, Inc. is an American technology conglomerate based in Menlo Park, California. It was founded by Mark Zuckerberg, along with his fellow roommates and students at Harvard College, who were Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes, originally as TheFacebook.com—today’s Facebook, a popular global social networking service. Facebook is one of the world’s most valuable companies. It is considered one of the Big Five companies in the U.S. information technology industry, along with Google, Apple, Microsoft, and Amazon.
Facebook offers other products and services beyond its social networking platform, including Facebook Messenger, Facebook Watch, and Facebook Portal. It also has acquired Instagram, WhatsApp, Oculus VR, Giphy and Mapillary, and has a 9.9% stake in Jio Platforms.[9]
Facebook filed for an initial public offering (IPO) on February 1, 2012.[10] The preliminary prospectus stated that the company was seeking to raise $5 billion. The document announced that the company had 845 million active monthly users and its website featured 2.7 billion daily likes and comments.[11] After the IPO, Zuckerberg would retain a 22% ownership share in Facebook and would own 57% of the voting shares.[12]
Underwriters valued the shares at $38 each, pricing the company at $104 billion, the largest valuation to date for a newly public company.[13] On May 16, one day before the IPO, Facebook announced that it would sell 25% more shares than originally planned due to high demand.[14] The IPO raised $16 billion, making it the third largest in U.S. history (just ahead of AT&T Wireless and behind only General Motors and Visa).[15][16] The stock price left the company with a higher market capitalization than all but a few U.S. corporations – surpassing heavyweights such as Amazon, McDonald’s, Disney, and Kraft Foods – and made Zuckerberg’s stock worth $19 billion.[15][16] The New York Times stated that the offering overcame questions about Facebook’s difficulties in attracting advertisers to transform the company into a “must-own stock”. Jimmy Lee of JPMorgan Chase described it as “the next great blue-chip”.[15] Writers at TechCrunch, on the other hand, expressed skepticism, stating, “That’s a big multiple to live up to, and Facebook will likely need to add bold new revenue streams to justify the mammoth valuation”.[17]
Trading in the stock, which began on May 18, was delayed that day due to technical problems with the NASDAQ exchange.[18] The stock struggled to stay above the IPO price for most of the day, forcing underwriters to buy back shares to support the price.[19] At closing bell, shares were valued at $38.23,[20] only $0.23 above the IPO price and down $3.82 from the opening bell value. The opening was widely described by the financial press as a disappointment.[21] The stock nonetheless set a new record for trading volume of an IPO.[22] On May 25, 2012, the stock ended its first full week of trading at $31.91, a 16.5% decline.[23]
On May 22, 2012, regulators from Wall Street‘s Financial Industry Regulatory Authority announced that they had begun to investigate whether banks underwriting Facebook had improperly shared information only with select clients, rather than the general public. Massachusetts Secretary of State William Galvin subpoenaed Morgan Stanley over the same issue.[24] The allegations sparked “fury” among some investors and led to the immediate filing of several lawsuits, one of them a class action suit claiming more than $2.5 billion in losses due to the IPO.[25] Bloomberg estimated that retail investors may have lost approximately $630 million on Facebook stock since its debut.[26]
Standard & Poor’s added Facebook, Inc. to its S&P 500 index on December 21, 2013.[27]
On May 2, 2014, Zuckerberg announced that the company would be changing its internal motto from “Move fast and break things” to “Move fast with stable infrastructure”.[28][29] The earlier motto had been described as Zuckerberg’s “prime directive to his developers and team” in a 2009 interview in Business Insider, in which he also said “Unless you are breaking stuff, you are not moving fast enough.”[30]
In May 2019, Facebook founded Libra Networks, reportedly in order to develop their own stablecoin cryptocurrency.[31] In recent developments it has been reported that Libra is being supported by financial companies like Visa, Mastercard, PayPal and Uber. The consortium of companies is expected to pool in $10 million each to fund the launch of the cryptocurrency coin named Libra.[32] Depending on when it receives approval from the Swiss Financial Market Supervisory authority to operate as a payments service, the Libra Association plans to launch a limited format cryptocurrency in 2021.[33]
After the attack of January 6, 2021 against the US Capitol, Facebook announced that it will ban the advertisements of weapon accessories and the products that can are can be used for any armed combat. This ban will last at least 2 days after the inauguration of U.S. President Joe Biden on Jan. 20.[34]
