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Two college mates from Harvard University, Mark Zuckerberg and Eduardo Saverin started the biggest social networking website in the year 2004 which we all know as Facebook. Initially, the website was named as 'FaceMash', later it was changed to 'The Facebook' and, on the suggestion of Sean Parker who was the co-founder of 'Napster' they decided to drop "the" from the name and since then it is called 'Facebook'. As it was becoming famous they decided to expand its services across all Ivy League Institutions and later in other educational institutions as well. Gradually it became accessible to everyone around the world who claims to be older than 13 years of age and has a valid e-mail address. After they turned out to be profitable in the year 2010, Facebook went for their IPO in the year 2012.
Since the day of inception, Facebook has been led by Mark Zuckerberg as he is the Chairman and CEO of the biggest social networking site. Sheryl Sandberg is the Chief Operating Officer of Facebook, Dave Wehner is the Chief Financial Officer, Mike Schroepfer is the Chief Technology Officer and Chris Cox is the Chief Product Officer of Facebook.
Being one of the top tech and omnipresent companies in the world that affects productivity everywhere, Facebook always stays in news. When we talk about recent mergers and acquisitions by Facebook, it has acquired a blockchain service company, 'Chainspace' which is their first acquisition in blockchain industry and retail computer vision services developer 'GrokStyle' both in February of 2019.
Facebook Revenue Growth
As on 1st March 2019, Facebook has a market capitalization of over $450 billion. In early 2019, they released their 2018 financial figures that show they had total revenue of over $55 billion which is 37% more than the revenue of 2017 which was around $40 billion. Their EPS (earning per share) is valued around $7.57 in 2019 which is 40 per cent more than 2017 EPS of $5.39.
Highlighted Points from the Article
Facebook has aggressively acquired various companies in different fields since starting.
Strategies to Increase their earning is through diversification.
Acquisitions that are outside the industry of a social networking company to buy.
Purchase of Instagram and WhatsApp in the year 2012 and 2014 respectively.
Top 5 companies acquired by Facebook
Facebook has adopted an aggressive strategy for acquiring companies from different industries. They have acquired various companies like WhatsApp and Instagram for over a billion dollars and converted them into multi-billion dollar companies. Following is a list of top companies which was acquired by Facebook till now.
Acquired for – $1 billion
Date of Acquisition – 9th April 2012
Instagram is a popular media sharing application which was launched by Kevin Systrom and Mike Krieger on 6th October 2010. Despite the fact that Instagram was not generating any kind of revenue but still Facebook bought it for a $1 billion and now its net worth over $100 billion. Major part of its revenue is generated from on-platform advertisements.
It is not wrong to say that acquiring Instagram was the best thing happened to Facebook as it generates more advertising revenue than its parent company. Estimated annual revenue of Instagram is around $8 billion or maybe more. Instagram has also helped Facebook to transfer its users from a web browser to an application based platform, due to which there was a drastic growth in the total user of Instagram as it currently has over $1 billion, active user.
Acquired for – $19 billion
Date of Acquisition – 19th February 2014
WhatsApp is a messaging and calling application which is used worldwide. It was founded by Jan Koum and Brian Acton in the year 2009 as an alternative of SMS services at a low cost. WhatsApp offers free messaging and calling service to the other users of this application, regardless of their location and time zone.
Whatsapp used to generate revenue from its initial purchase of $1 or in some areas it was a yearly $1 service fee. It is estimated that WhatsApp is going to reach annual revenue of $5 billion by the year 2020. However, how this application has been monetized is yet unclear. But WhatsApp remains a free messaging and calling app and one thing that makes it user-friendly that it doesn't support ads. Therefore, it has an active user base of 1.5 billion which is more than Instagram.
Oculus VR
Acquired for – $2.3 billion in cash and stock.
Date of Acquisition – 25th March 2014.
This tech company was founded by Palmer Luckey, Brendan Iribe, Michael Antonov, Jack McCauley and Nate Mitchell in the year 2012 as a virtual reality technology company. It is best known as Oculus Rift which designs VR (virtual reality) headset to make your gaming experience more realistic.
Recently they launched their first-ever stand-alone virtual reality headset which can be operated without a console attachment as Oculus Go. Well, Facebook has never revealed the revenue of Oculus but it is clear that they are aiming to dominate the virtual reality software and hardware market.
After Facebook purchased Oculus VR in the year 2014, this supplementary has purchased various companies of its own. One of the most crucial acquisitions was made in the year 2015 when they purchase Surreal Vision, a company specializing in 3D scene mapping reconstruction.
Friend Feed
Acquired for – $4.7 million in cash and stock.
Date of Acquisition – 10th August 2009.
Friend feed is one of the first companies that were purchased by Facebook. Currently it is not an active brand of its parent company but still, it holds its importance in the history of Facebook. FriendFeed served as an aggregator, drawing together information from social media sites, blogs, and RSS-type feeds. FriendFeed was eventually shut down in 2015, but its services and aesthetic live on in many of the features of Facebook's News Feed, a core component of the Facebook user experience.
Live Rail
Acquired for – $500 million in cash.
Date of Acquisition – 14th August 2014.
Live Rail was founded in the year 2007 by Andrei Dunca, Mark Trefgarne and Sergiu Biriș and it was acquired by Facebook in the year 2014 for almost $500 million. It helps the publisher of the video by providing them the data and technology required for video advertising so that they can identify and target their audience. After facebook purchased Live Rail, they shifted its focus points – slowly it removes the company's bidding network and incorporates its projects into the main brand. It is said that integrating LiveRail into the Facebook umbrella did not go as smoothly as it was planned.
Recent Acquisitions and Acquisition Strategy
Facebook is now included in the top companies in the world, therefore, they are searching for new and better ways to make more money. The main strategy of Facebook to grow and earn more profit is through diversification. Facebook is focused on acquiring various companies from different fields since 2014.
Except Oculus VR, facebook bought many other companies like Ascenta and ProtoGeo in the year 2014. Ascenta is a company that makes drone with they are planning to use it to bring internet to everywhere in the world. ProtoGeo will help Facebook to enter into the market of health and fitness monitoring.
They also acquired a video software company called 'Vidpresso' in the year 2018 an undisclosed amount of money and Redkix, which is a messaging app for over $100 million as they are planning to unify its messaging platforms like Whatsapp, FB messanger and Instagram DM on one platform.
Following is a list of Facebook all Acquisitions
Company NameDate of AcquisitionsAcquired for (USD)facebook.com (domain name)August 23, 2005200,000ParaKeyJuly 19, 2007UndisclosedConnectUJune 23, 200831,000,000FriendFeedAugust 10, 200947,500,000OctazenFebruary 19, 2010UndisclosedDivvyshotMarch 2, 2010UndisclosedFriendster patentsMay 13, 201040,000,000ShareGroveMay 26, 2010UndisclosedZenbeJuly 6, 2010UndisclosedNextstopJuly 8, 20102,500,000Chai LabsAugust 15, 201010,000,000Hot PotatoAugust 20, 201010,000,000drop.ioOctober 29, 201010,000,000FB.com domain nameNovember 15, 20108,500,000Rel8tionJanuary 25, 2011UndisclosedBelugaMarch 2, 2011UndisclosedSnaptuMarch 20, 201170,000,000RecRecMarch 24, 2011UndisclosedDayTumApril 27, 2011UndisclosedSofaJune 9, 2011undisclosedMailRankJune 9, 2011undisclosedPush Pop PressAugust 2, 2011undisclosedFriend.lyOctober 10, 2011undisclosedStrobeNovember 8, 2011undisclosedGowallaDecember 2, 2011undisclosedCaffeinatedmindFebruary 20, 2012undisclosedInstagramApril 9, 20121,000,000,000TagtileApril 13, 2012undisclosedGlanceeMay 5, 2012undisclosedLightbox.comMay 15, 2012undisclosedKarmaMay 21, 2012undisclosedFace.comJune 18, 2012100,000,000SpoolJuly 14, 2012undisclosedAcrylic SoftwareJuly 20, 2012undisclosedThreadsyAugust 24, 2012undisclosedAtlas SolutionsFebruary 28, 2013<100,000,000osmetaMarch 2013undisclosedStorylane (Mixtent)March 2013undisclosedHot StudioMarch 14, 2013undisclosedSpaceportApril 23, 2013undisclosedParseApril 23, 201385,000,000MonoidicsJuly 18, 2013undisclosedJibbigoAugust 12, 2013undisclosedOnavoOctober,13, 2013undisclosedSportStreamDecember 17, 2013undisclosedLittle Eye LabsJanuary 8, 201415,000,000BranchJanuary 13, 201415,000,000WhatsAppFebruary 19, 201419,000,000,000Oculus VRFebruary 19, 20142,000,000,000AscentaMarch 27, 201420,000,000ProtoGeo OyApril 24, 2014undisclosedPrivateCoreAugust 7, 2014undisclosedLiveRailAugust 14, 2014400,000,000 – 500,000,000WaveGroup SoundAugust 26, 2014undisclosedWit.aiJanuary 6, 2015undisclosedQuickfire NetworksJanuary 8, 2015undisclosedTheFind, Inc.March 14, 2015undisclosedSurreal VisionMay 26, 2015undisclosedEndagaOctober 3, 2015undisclosedPebblesJuly 16, 201560,000,000MSQRD (Masquerade)March 9, 2016undisclosedTwo Big EarsMay 23, 2016undisclosedNascent ObjectsSep 19, 2016undisclosedInfiniledOctober 10, 2016undisclosedCrowdTangleNovember 11, 2016undisclosedFaciometricsNovember 16, 2016undisclosedZurich EyeNovember 2016undisclosedOzloJuly 31, 2017undisclosedFayteq AGAugust 2017undisclosedtbhOctober 16, 2017undisclosedConfirmJanuary 23, 2018undisclosedBloomsbury AIJuly 201830,000,000RedkixJuly 26, 2018100,000,000VidpressoAugust 13, 2018undisclosedDreambitNovember, 2018undisclosedChainspaceFebruary 2019undisclosedGrokStyleFebruary 8, 2019undisclosedServicefriendFebruary 8, 2019undisclosedSeptember, 2019November, 2018undisclosedCTRL-labsSeptember, 2019undisclosed, but reportedly between $500 million and $1 billion
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