Why Facebook Could be the First $1 Trillion Market Cap Company

facebookAs Facebook shares continue to hit fresh all-time highs, some analysts are now predicting the company could soon become the largest in the history of world.

Paul R. La Monica of CNN is one of those analysts, noting that the stock would need to nearly triple from current levels to reach the elusive $1 trillion market cap.

Currently, Facebook’s $338 billion market cap puts it in seventh place among the largest U.S. companies. The company’s service is incredibly pervasive. “There’s a lot to like about Facebook. The company recently announced that its Messenger platform crossed the 1 billion monthly active user mark, joining the core Facebook service, WhatsApp and Groups at this nine zeroes milestone,” says La Monica.

Facebook also owns photo sharing app Instagram, which boasts 500 million users of its own. These incredibly large user bases mean plenty of potential upside for earnings growth. The Wall Street analysts consensus expects FB to boost EPS by 31% annually over the next five years, with a massive 87% growth this year.

Facebook stock has responded in kind to the company’s growing earnings:


Not everyone is bullish, of course. BTIG Research just downgraded FB, noting:

“While we were SELL rated on Facebook after its IPO due to concerns over it ability to pivot to mobile, we reversed to a BUY rating in October 2013, with the stock at $49.40. With Facebook stock now over $120, exceeding the $117 price target we set one year ago this week, we believe the risk/reward is no longer compelling.

Facebook remains one of the only ways to play the shift of legacy media ad dollars to mobile and its advertising growth rate remains staggeringly high, especially for a $348 billion market cap company. However, investor expectations over the past year have risen dramatically and we now feel the bar is simply too high. In turn, we are downgrading the stock to Neutral from Buy and removing our price target.”

Shares of Facebook Inc (NASDAQ:FB) fell $1.06 (-0.88%) to $119.55 in Friday morning trading. The stock has gained more than 14% since the start of 2016, and 212% since its highly-publicized IPO back in May 2012.

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