Facebook turns 10 but investment companies remain wary

Facebook celebrates turning 10 years old on February 4. Whilst its shares are doing well, investment companies appear to be wary of investing, with just six firms exposed to the social networking site.

Last month, the business reported profits of $1.5 billion (£920m) for 2013, with fourth quarter revenues up 63% when compared to the same period in 2012. As of December, the site had 757 million daily users worldwide. Founder Mark Zuckerberg has previously set out plans to connect the ‘next 5 billion’ to the internet.

Shares increased by 10% following the better than expected results. However, research from the Association of Investment Companies (AIC) found that just six investment companies had exposure to Facebook. The limited number could be linked to some of the cynicism from commentators at the time of Facebook’s initial public offering (IPO) in May 2012.

James Anderson, manager at Scottish Mortgage Investment Trust, said, “Having met Mark Zuckerberg, we opted to ignore the laughter of many and bought shares in Facebook at IPO and we have added more since then. The company is making decent money and has a fantastic opportunity to dominate online advertising given its extraordinary data base of users.”

Facebook can offer sustainability-minded investors an opportunity to diversify their portfolio and invest in the technology sector. The campaign group Greenpeace recently praised Facebook for cleaning up its environmental footprint and pushing for wider availability of renewable energy sources.

The firm’s new data centre in Iowa, which is expected to start serving traffic in early 2015, will be supplied by 100% renewable energy. Meanwhile, its headquarters in California also have solar panels on the building to generate renewable electricity as part of the firm’s bid to operate a more sustainable business model.

The company previously teamed up with market intelligence firm Cleantech Group to offer a cash prize for an idea that will promote clean energy and sustainability on the social networking site. The competition called on people to come up with a product, application or service that will engage Facebook’s users on issues relating to the environment, energy and resources. Solar crowdfunding website SunFunder won the competition in March 2013.

Walter Price, manager at RCM Technology Trust, which also invests in Facebook, said, “Looking beyond the social space, we think payments are the next area to be transformed by the proliferation of smartphones and could garner Facebook-like growth opportunities. There are numerous companies and even peer-to-peer networks cropping up vying for their piece of the digital wallet.”

Further reading:

Facebook’s Zukerberg tops US philanthropy list after $990m charity

Greenpeace praises Facebook and Apples’ environmental efforts

Mark Zuckerberg unveils Facebook’s plans to connect ‘next 5 billion’ to the web

Solar project wins Facebook competition

Facebook and Cleantech Group team up for sustainability competition