Facebook

Definition

Facebook is a social media platform that allows users to connect, share content, and communicate with each other. It has grown into one of the largest digital advertising platforms, influencing market trends and corporate valuations.

5 Must Know Facts For Your Next Test

1. Facebook's IPO in 2012 was one of the largest in tech history, significantly impacting stock market dynamics.
2. The company's revenue model heavily relies on digital advertising, making it a key player in the tech sector's financial markets.
3. Facebook's stock performance is often analyzed using Dividend Discount Models (DDMs) and Discounted Cash Flow (DCF) models to project future cash flows.
4. Market participants closely monitor Facebook's user growth metrics as they directly affect its valuation and stock price movements.
5. Regulatory scrutiny and data privacy concerns can have substantial impacts on Facebook’s market performance and investor sentiment.

Review Questions

• How did Facebook's IPO influence the broader stock market?
• Why are DDMs and DCF models relevant when analyzing Facebook's stock?
• What role do user growth metrics play in Facebook's valuation?

Related terms

IPO:

Initial Public Offering; the first time a company offers its shares for public purchase.

Digital Advertising: Promotional content delivered through online platforms like social media, search engines, websites, etc.

Valuation:

The process of determining the current worth of an asset or a company.