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Facebook Hits $1 Trillion Market Cap for the First Time

Plus500 | Tuesday 29 June 2021

Facebook closed at a $1 trillion valuation on Monday, becoming one of the few U.S. companies to reach this milestone, and the fastest to cross this level. The company’s stock price rose by 4.2% yesterday, the most in two months, after a Federal judge dismissed two antitrust lawsuits brought against Facebook by the Federal Trade Commission and several state Attorney Generals. 

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Facebook’s value has increased by 33% in 2021, with users relying on the site to stay in touch amid the forced lockdowns caused by the COVID-19 pandemic. This was accompanied by a 48% increase in Q1 2021 sales growth, with average ad prices increasing by 30% in Q1 2021 versus Q1 2020 according to the company’s last earnings report. 

Yesterday’s Facebook price surge means that there are now five U.S. companies worth at least $1 trillion. In addition to Facebook (FB), the 13-digit valuation club members are Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOG)

Most of these mega-cap companies also did well yesterday, possibly benefitting from Facebook’s antitrust ruling. Some of the companies have already been targeted under new bills recently introduced into Congress that are meant to reduce monopolistic practices. Apple stock was up by 1.2%. Microsoft saw a 1.4% jump. Amazon managed to gain 1.2% and Alphabet traded flat.

There is a steep dropoff in valuations after the top five tech companies. However, there are six companies with U.S. listings that have market caps above $500 billion. These include TenCent (0700.HK), Tesla (TSLA), Berkshire Hathaway (BRK.B), Alibaba (BABA), Taiwan Semiconductor (TSM) and Visa (V)

Facebook Antitrust Complaints Dismissed Due to Lack of Proof

At the heart of the antitrust cases were complaints that Facebook had maintained a monopoly through anticompetitive conduct, including the purchases of Instagram in 2012 and WhatsApp in 2014. The FTC had suggested that Facebook be forced to spin off both Instagram and WhatsApp and would have required Facebook to seek special permission before making any future acquisitions.

Judge Boasberg, the Federal judge in the case, ruled that the complaint wasn’t founded as the FTC had failed to provide metrics proving that Facebook controlled more than 60% of the market. Additionally, Judge Boasberg was unswayed by the separate complaint that Facebook refused to allow interoperability with its competitors, noting that there was nothing illegal about the policy in general. Although the judge dismissed the complaint in both cases, the plaintiffs have 30 days to resubmit amended complaints.

The last year has been successful for tech giants like Facebook. Which company will be the next to join the ranks of the $1 trillion club?

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