Facebook met again on Wednesday when its CEO Mark Zuckerberg testified before Congress. Zuckerberg was asked a number of issues, including data privacy and cryptocurrency, race, diversity and civil rights.
However, despite the controversy surrounding the company, Facebook's actions have shown strength and resilience over the years.
If you invested in Facebook during your initial public offering, or IPO, you would have made a healthy profit. A $ 1,000 investment made on May 18, 2012, the date Facebook was released, would be worth nearly $ 4,900 on October 24, 2019, with a total return of about 400 percent, according to CNBC calculations. In the same period, by comparison, the S&P 500 achieved a total return of about 170%. The current share price on Facebook is around $ 184.
While Facebook's actions have fared well over the years, any single action may outperform or underperform and past returns do not predict future results. Two key factors that have contributed to Facebook's success over time are Instagram's 2012 acquisitions and WhatsApp in 2014. As Facebook's legacy maturity, these additions to its app portfolio have helped drive user growth to new ones. levels.
CNBC: Facebook shares on October 24, 2019.
During Zuckerberg's visit to Capitol Hill this week, lawmakers focused on learning more about Facebook's plan for a new cryptocurrency, the pound. Specifically, members of the House of Representatives are concerned about how the Libra Association, based in Geneva, Switzerland, will be regulated and governed.
After Zuckerberg's testimony, lawmakers were still not satisfied and questioned if anything had been done. Several House members also seemed confused as to why Facebook chose Switzerland as the Libra base.
Despite the friction between Zuckerberg and lawmakers, Facebook shares rose 2 percent on the day of the hearing.
The tech giant has also struggled to maintain user engagement or the amount of time people spend on Facebook. This is due to competition from other social platforms, said Michael Wolf, Activate's co-founder and managing director, in a recent segment in CNBC's "Squawk Box." This includes networks like LinkedIn, Snapchat and Twitter, according to Activate's Technology and Media Outlook report in 2020.
"When you add Facebook and [Facebook] Together in Messenger, Facebook's overall engagement has increased by about 2% over the last two years, "said Wolf." But when you look at Facebook correctly without Messenger, it decreases by about 25%. And a lot of it has to do with the fact that Facebook users themselves are using other social networks. "
In 2018, Facebook faced a series of scandals that caused its actions to sink nearly 40% in November of that year. This includes changes that Facebook made to its news feed in January 2018, which Zuckerberg predicted would hurt user involvement and data breach by Cambridge Analytica, which compromised data from Facebook's 87 million users. When Facebook chief operating officer Sheryl Sandberg testified in September 2018 before the Senate Intelligence Committee to discuss the misuse of Facebook services by Russian Internet trolls, Facebook's stock price fell by nearly 8%.
By July 2019, however, revenue had grown by 28% year on year and shares had risen by more than 50% in the year, Facebook said in its second quarter earnings. Despite consistent reaction to its privacy regulations, Facebook's ability to recover shows how daily users are loyal, technology analyst Gene Munster told CNBC in July.
This month, Facebook has announced it will make an effort to combat voter suppression and misinformation before the US presidential election in 2020. Facebook says it plans to clearly mark any content that independent verifiers have flagged as fake. In addition, to increase transparency, Facebook will require owners of Facebook pages with large audiences in the US or running politically charged ads to display their legal name, city, phone number, or website.
If you are thinking about investing, experts, including Warren Buffett, generally advise starting with index funds, which keep all companies in an index, such as the S&P 500. How index funds fluctuate with the market and are not performance-linked. From a single business, they are less risky than individual stocks, making them a safer option for beginners.
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