QoD: Which company performed better in its first two years as public company: SNAP or Facebook?

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Mar 11, 2019
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Question of the Day, Investing, Stocks

Hat tip to Beth Tallman for the idea for this question! 

Answer: Facebook

Snap just marked its second anniversary since going public on March 2, 2017 at a price of $17/share. Today it trades at $9.48, a 44% drop from its IPO price so investors who bought the IPO hype are licking their wounds. 

Facebook went public on May 18, 2012 at a price of $38/share. Two years later, it was about $61/share, a 60% increase from its IPO price and as of March 8, 2019 the stock trades at $169. 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Questions:

  • Which social media site do you spend more time on: Facebook (they also own Instagram and WhatsApp too) or Snap? 
  • How do Snap and Facebook make money since they both offer their service for free?
  • Why do you think that Facebook's stock has done so much better than Snap in their first two years?
  • Facebook recently announced that they believe the future of Facebook will be built around private networks. Whose strategy do they appear to be copying? 

Behind the numbers (NY Times):

Over the years, Facebook has swiped many nifty ideas from Snapchat, the ephemeral messaging platform — which Mr. Zuckerberg actually tried to buy many years ago when it was still a start-up. That has been especially true at the Facebook-owned Instagram, which did a wholesale shoplift of Snapchat’s Stories by creating … wait for it … Instagram Stories!

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Let students try to guess the direction of stock prices within a 60 day window after a company goes public in this engaging simulation: Get Rich With Tech IPOs [teaser title as we don't believe most can]

 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.