Facebook may not have invented the concept of social media, but it certainly popularized it and made it into the massive industry that it is today, with several platforms from Twitter to Instagram to Snapchat joining the fray. Although its status as an industry leader may not be its dominant reputation today due to series of controversies, particularly the 2016 election, Facebook remains of the biggest companies in the world, with a huge net worth to match.
In this article, we take a look at how much Facebook is worth, as well as how the company makes its money from its extensive body of users.
How Much Is Facebook Worth?
Facebook has a net worth of $512 billion, if you go by the company’s market capitalization, a long way in value for a company that started more than 18 years ago, in a Harvard dormitory with more less than $10,000 in startup cost. However, the website, GoBankingRates, puts it at a more conservative $138.3 billion, based on the company’s profits, revenue, assets, and debts.
The social networking company was founded in 2004 by five men, Dustin Moskovitz, Chris R. Hughes, Andrew McCollum, Eduardo P. Saverin, and Mark Zuckerberg, who also work as its CEO.
Facebook started as a membership website for Harvard students, before expanding its coverage to other Ivy League schools like Yale and Stanford. Eventually, two years after it was established, it became available to the general public. It reached 500 million users in July 2010 and its one billionth user in October 2012. Today, the company has more than $2.4 billion monthly active users.
The continued growth in the number of users of Facebook translated to an increase in its value. With more than 50 million users in 2007, Facebook was worth $15 billion, according to Microsoft, who made a $240 million investment in the company. By 2010, with more than 500 million users, Facebook was valued at $41 billion, placing it behind Google and Amazon among the largest web companies in America.
When the company eventually went public in 2012, in a well-publicized IPO, the company was valued at $104 billion. In the year it went public, Facebook recorded an income of $5 billion, joining America’s Fortune 500 companies.
Since then, Facebook has grown to a net worth of $512 billion, coming from having more than 39,000 employees, total equity of $84 billion, $97 billion in assets, revenue of $55.8 billion as of 2018 and subsidiaries like WhatsApp, Instagram, Oculus, and Calibra.
Facebook crossed the half a trillion mark in net worth in June 2017 when it exceeded $500 billion in market value. Today, Facebook is more than just a social networking company. It is an internet-based company with several products and services.
How Does Facebook Make Its Money?
Facebook has built its incredible worth by making its money primarily from advertising. Leveraging on its astonishing user base, the company sells its website space to companies who wish to advertise to users on its platform.
Over time, taking advantage of the technology at its disposal, its ability to deliver targeted ads based on the personal data of users on the platform has helped it become one of the leading advertising destinations in the world.
Since ventured into advertising early on into its existence, and has boasted of increased revenue via advertising year-on-year. Four years after its creation, Facebook made $272 million in revenue in 2008, increasing it by more than 170% to $775 million in 2009. At the end of 2010, Facebook had an advertising revenue of $2 billion.
It has continued its growth as an advertising giant, recording $40 billion in advertising revenue in 2017, with analysis showing that Facebook made an average of $20.21 per user from advertising, according to Ozy.com. Today, Facebook earns more than $1 billion per quarter in advertising revenue, totaling more than $55.8 billion as of 2019.
Facebook’s incredible worth comes from an advertising base of more than three million active advertisers, several of which are small businesses. Among giant brands that advertise on Facebook include Visa, Nike, McDonald’s, Ford, Starbucks, Nestle, and several other international brands.
Aside from income generated from advertising, Facebook also makes its money by selling user data to third parties. The business model hasn’t been without its own controversies, especially its impact on the 2016 Presidential election.
One thing is for sure, Facebook under Mark Zuckerberg might not be the most beloved company in the world, but it certainly does know how to make money.