It was just over 11 years ago that Mark Zuckerberg launched the world’s most popular social network from his Harvard dorm room and it was just over three years ago that the company went public, says Timothy Lutts, editor of Cabot Stock of the Month.
So even though Facebook (FB) is known far and wide, the fact is that this is still a young company. It may be big, but it’s still growing fast.
One big reason for that is that anyone with an Internet connection can use it, for free. Nearly a billion people in the world do every day. And every month, more than 1.4 billion individual users do.
The reason Facebook is free, of course, is advertising. Facebook has emerged as a key channel for advertisers, who have been struggling to find new ways to reach their target markets as print media declines.
Interestingly, Facebook is working through internet.org to offer free Internet access services to less developed countries. The service debuted in Zambia just a year ago and is now available in 17 countries.
There’s no question that access to information and knowledge is a powerful tool for people in less developed countries. But there’s also no question that these people represent a growth market for Facebook.
And that’s far from the company’s only growth initiative. Facebook has been quick to buy up a number of young companies over the past decade, sometimes to put competitors out of business and sometimes to get their hands on prime talent. There have also been two big acquisitions.
Facebook bought Instagram for $1 billion and is just beginning to monetize the photo sharing network and its 300 million users.
And just over a year ago, it spent $19 billion to acquire WhatsApp, the most popular messaging app on smartphones. It’s a huge success in international markets and the future is bright.
In June, and then July, FB broke out to new highs, as buyers saw an increasingly profitable future thanks in particular to WhatsApp and Facebook’s ability to better monetize mobile traffic.
Technically, the stock has continued to consolidate normally and is now working on building a base. If you don’t own it yet, it’s rated buy.
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