Facebook: Blue in Person, Gold in Investment

Happy Tuesday to everyone! First, I would like to congratulate our Vice-President, Chris Cattafi, on his acceptance to NYU! Also, we know everyone is busy over the holidays therefore this will be our last post of the calendar year. We wish everyone Happy Holidays, Merry Christmas, and a Happy New Year (full of investing ;) ).
Our post today is about social network giant Facebook (FB). First established to compare people, and then as a social media site reserved exclusively for top-tier universities, Facebook now has over one billion users every month. Taken from a Harvard dorm room, the company established and run by CEO Mark Zuckerberg since 2004 is the epitome of modern online communications. Since the conglomerate is free, FB builds its revenue from advertising, lots and lots of advertising. For those of you who use Facebook, you most likely notice the right column filled with ads, often times specialized. You may also notice throughout the site the ability to advertise, create a page for a business, and even promote one's recently posted status update to ensure everyone will see it! These abilities, some of them quite ridiculous, build the bulk of revenues, and the recent addition of more advertising opportunities are sending stocks skyrocketing.
As we look at Facebook's stock history, we see a sharp drop since the beginning, a slight curve back up, and a drop down towards $20 a share. We all remember Facebook's first day on the market; easily one of the biggest failures, sinking about $12 in a week. Stocks have again been falling since July, but with new advertising campaigns are on the rise again.
In late October, Facebook sought such new programs to increase profits, investment, and overall reliability on the stock market. The newly announced campaign allowed Facebook to open at $24 on October 24th, while it closed at $20 on the 23rd. This 25% increase slowly fell back down towards mid-November, but is now tremendously rising again. When hitting a monthly low, Facebook predicted less revenue than the previous quarter. Fortunately (and for us), I predicted that stocks would quickly rise again -- we bought 90 shares of FB on the Investopedia Stock Simulator priced at $22.34 each nearly a month ago. This fairly large investment, of over $2000, has certainly paid off. When starting to write this, I sold all 90 shares at $27.81, in accordance to my predicted jump upwards. The difference between buy/sell amounts to a profit of almost $500, an outstanding 25%. Now is a better time than ever to invest in Facebook: it is headed back into the top of the market and we expect even more growth and profits over the next year. Perhaps a New Year's resolution could be to invest more in FB!
Thanks for reading our posts about the Stock Market and the global economy. We will write again in January to analyze Pharmaceuticals, and follow with Consumer Goods to analyze holiday shopping a few weeks later. With that, the Investment Club at LMHS wishes everyone Happy Holidays and a Happy New Year!!!