How Much is Facebook Worth And How Do They Make Their Money?

Facebook may not have invented the concept of social media, but there is no doubt it popularized it and made it into the massive industry it has become today, with several platforms from Twitter to Instagram to Snapchat joining the fray.

Controversies such as the privacy data scandals on Cambridge Analytica and the U.S. 2016 election where Facebook was credited for electoral malpractices may have sabotaged the company’s reputation as an industry leader but it remains one of the world’s largest technology companies with a huge net worth to match.

Herein, we take a look at how much Facebook is worth, as well as how the company makes its money from its extensive body of consumers.

In The Beginning …

The social networking giant was founded in 2004 by five men, Dustin Moskovitz, Chris R. Hughes, Andrew McCollum, Eduardo P. Saverin, and Mark Zuckerberg, who also doubles 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 the third quarter of 2012, making it the first social network ever to do so. Today, the company has more than $2.6 billion monthly active users; this is without the users of the company’s other products (WhatsApp, Instagram, or Messenger). The continued growth in the number of its users translates to an increase in its value.

With over 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 Facebook eventually went public in 2012, in a well-publicized IPO, the company was valued at $104 billion. That same year, it recorded an income of $5 billion, joining America’s Fortune 500 companies.

Today, Facebook Inc. is not just a social networking platform but an internet-based company with several products and services, raking in a real bank as it serves its billion of followers.

Facebook’s Financial Strength

Facebook may not be a trillion-dollar company as yet or even the leading name in the tech scene, but the social networking outlet boasts an important valuation all the same. Eight years after it was founded, in May 2012, the company made its debut on the New York Stock Exchange (NYSE). At the time, it was the biggest technology IPO in history.

Considering that Facebook was valued at $41 billion in 2010, to increase by almost a hundred percent, $79.804 million ten years later was a huge leap, making it one of the richest companies in the world.

Despite the several controversies that have accompanied it from infancy, Facebook has remained one of the titans of Silicon Valley with more than 44,000 employees. It has total equity of $101.1 billion, $133.4 billion in assets, revenue of $70.7 billion as of 2019, and subsidiaries like WhatsApp, Instagram, Oculus, and Calibra.

Her Market Capitalization

A company’s worth is represented by its market capitalization otherwise called market cap. Market cap is a company’s current stock price multiplied by the number of its outstanding shares.

As at the time of this publication, Facebook is worth more than $655 billion going by her market capitalization, a long way for a company that started less than two decades ago with 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.

Facebook Founder’s Net Worth

Facebook Inc., headquartered in Menlo Park, California, has come a long way from an idea conceived in a Harvard dorm to a leading social networking website. It is now a tech giant and one of the Big Four tech companies in the world.

It was founded by five young Harvard students, however, Mark Zuckerberg is the only one still at work there. The company went public in May 2012 under Zuckerberg’d leadership. Now the CEO and chairman, he is the controlling shareholder, with 410 million shares of Facebook stock.

Other top shareholders include investment management firms Vanguard Group Inc., Black Rock Inc., T. Rowe Price Associates Inc., and financial service company, FMR LLC.

Mark Zuckerberg is one of the richest men in the world, with a whopping net worth of $86.3 billion; he was listed by Forbes as the 4th-richest person in the world in July 2020. While he is the only one that remained out of the original five, the others have gone on to build highly lucrative firms and made fortunes for themselves.

Dustin Moskovitz is currently the co-founder and CEO of Asana, a work productivity software unicorn and is worth over $14 billion. Eduardo Saverin, on the other hand, has a 2% stake in Facebook Inc. and is also the co-founder of B Capital, a venture capital firm. His net worth is estimated to be $13.1 billion.

Chris Hughes worked as the company’s first spokesperson for three years and also has a 2% stake in the company. He bought The New Republic magazine in 2012 and sold it four years later. He is the author of a 2018 book on economic equality and runs a venture capital fund and Juno, a nonprofit social network. Hughes has an estimated net worth of $500 million.

Andrew McCollum is Facebook’s co-founder and designed her first logo. He is currently CEO of TV streaming startup, Philo, and has an estimated net worth of $20 million.

Facebook Money Making Strategies

Facebook offers its products free of charge to users which enables them to connect, share, discover, and communicate, leaving many wondering how then does it generate revenues. These products enable advertisers and marketers to engage with their users while Facebook earns from their activities on the platform.

Advertisements

Facebook built its incredible worth in less than two decades, making the bulk of its revenue from advertisements to its over 2.6 billion monthly active users. Leveraging on its astonishing consumer 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 venturing into advertising early on into its existence, it 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.

Data Sales

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.