Facebook, Inc. Industry Analysis

Facebook Company Overview

Introducing Facebook

Facebook, Inc. is an American company that provides a variety of products to connect people and share stories through mobile devices and computers worldwide. The company was founded in 2004 by Mark Zuckerberg, Dustin Moskovitz, Chris Hughes, Eduardo Saverin and is headquartered in Menlo Park, California.1 The company went public May 18th, 2012 with an IPO of $38.2 As of September 24th, 2018, the stock price for Facebook was $165.41.2 The market cap for Facebook, as of September 24th, 2018, is a staggering $477,574,800,000.3 Facebook uses its website to enable people, businesses and other groups to connect, share and discover what is happening in the world. They also have standalone mobile applications for Facebook and Messenger. Another source of revenue comes from two companies they acquired; Instagram a photo and video sharing media platform; and Whatsapp, a mobile messaging application. Lastly, the company Oculus, a virtual reality content platform which enables users to engage in a fully-immersive and interactive environment to play games, learn, train and consume content while engaging within the online community.

Facebook Lately

As of late, a lot of negative connotations have been associated with Facebook’s brand as there have been mass-consumer-profile hacks as well as the notion that they are selling user data to companies to allow for ad targeting. This has users feeling uneasy about using the platform as is directly correlated with the recent decline in user growth and revenue per.4 There seems to be some internal issues with the culture at Facebook that start at the top with Mark Zuckerberg. What has been going on at Facebook has gone so far as to drive the founders of WhatsApp, Jan Koum and brian Acton, away from Facebook indefinitely.5 Amidst the current user disputes, they chose to resign from the company rather than try to align their values with the direction Facebook is heading. It appears there is trouble in paradise at Facebook.

Global Industrial Classification Standard

According to Standard and Poor’s NetAdvantage database, Facebook is classified under the Information Technology sector, with the industry being Software and Services, and the subindustry classification of Internet Software and Services.3 There is also a classification for sector Communication Services on the Standard and Poor’s Database, which can is confusing considering that their application software does enable communication, but is also considered Information Technology. This all could be subject to change, though, as the GICS classifications will be revamped at the end of September.

Graphic 1: GICS Classification

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Competitors

While Facebook is a giant in its respective industry, that doesn’t mean that the company doesn’t have any competition. Within the Internet Software and Services subindustry, the key competitors to Facebook are: Google Inc., Tencent Holdings Limited, and Baidu Inc..3 Tenctent and Baidu are big players within the global sub-industry, but it is clear that the closest domestic competitors would have to be Google, Twitter, and Snap.3

Business Model Defined

In a nutshell, a business model is defined as the rationale of how an organization creates, delivers, and captures value for consumers while doing so at a reasonable cost.5 The business model should reflect the goals of the company and how it intends to reach them. Every business process and policy adopted by a company is integrated into the business model. The best part of a the idea of the business model is that it is ever-changing. As the business world evolves, as should a company’s business model.