Already the fastest company ever to reach $250 billion in market value, the social network operator just jumped over $100 a share, capping a 451 percent rally since September 2012 for the fourth-best performance in the Standard & Poor’s 500 Index.
“The big seminal event for Facebook was showing they could make significant money and turn themselves into a well-run company,” Tim Ghriskey, who helps oversee $1.5 billion as managing director and chief investment officer at Solaris Asset Management, said by phone. The firm owns Facebook shares. “They’ve seen strong growth in advertising spending and viewership.”
This isn’t Facebook’s first flirtation with the $100 level. On July 21, the stock came within 1.6 percent of breaking it. It then became mired in the August stock market selloff, dropping 14 percent over three days to a two-month low. Since then it’s shown resilience, rallying back 21 percent.
Facebook joins 109 other members of the benchmark index in the three-digit club amid speculation that the company will continue to increase mobile-advertising sales on its application and others. Its ascent comes at a time when stock splits are increasingly rare in an American stock market that is dominated by institutional investors and exchange-traded funds that don’t care about the absolute price of a share.
Along with Apple Inc., Microsoft Corp., Amazon.com Inc. and Google Inc., Facebook is one of a quintet of technology giants that together make up almost 10 percent of the S&P 500 and more than a third of the Nasdaq 100. It’s the world’s seventh largest company, surpassing old economy stalwarts such as JPMorgan Chase & Co. and Johnson & Johnson.
Technology stocks have been by far the biggest contributors to S&P 500’s recovery from a 10-month low, rising 14 percent since the market bottomed on Aug. 25 and contributing 17.5 points to the S&P 500’s 184-point increase.
“Facebook has really established itself as a force,” Ghriskey said. “Reaching this level is a testament to the job management has done and the dominant product it is.”
Written by Joseph Ciolli of Bloomberg