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Facebook IPO: These companies would have made better bets over the past four years

Nicholas Wells
Aktualisiert
Zef Nikolla | Facebook via Bloomberg | Getty Images. It's been four years since the Facebook IPO. We stack up the numbers to show that it hasn't been the best performer in that time frame, but it's done well overall.

Exactly four years ago today — on May 18, 2012 — the world was able to trade Facebook (NASDAQ: FB) shares for the first time as a public company. The company has performed like gangbusters, gaining 215 percent since then.

The interesting thing about this amazing performance is that it's been beaten by plenty of other companies in the same time frame. Whether compared to other firms in the S&P 500 (INDEX: .SPX), or other initial public offerings from 2012, Facebook loses out to at least 10 companies each time.

2012 was supposed to be a stellar year for IPOs. But the European debt crisis dampened expectations and a market dip made companies hesitate to go public. Still, investing in 38 different U.S. companies that went public in 2012 would have doubled your money by now, according to data from FactSet.

Looking at the 154 U.S. IPOs from 2012 in FactSet's database shows that Facebook's performance is only 17th best. At a 209 percent return through Tuesday, that puts Facebook behind other companies like WageWorks (NYSE: WAGE) (504 percent), Proofpoint (NASDAQ: PFPT) (305 percent) and Vantiv (NYSE: VNTV) (219 percent).

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It did beat out other name brands like Trulia (: TRLA) (184 percent), Splunk (NASDAQ: SPLK) (188 percent), Workday (NYSE: WDAY) (157 percent) and Yelp (NYSE: YELP) (68 percent).

With a market value over $330 billion, Facebook is far and away the biggest company that went public in 2012. The next down is Workday (NYSE: WDAY), a human relations software company worth around $14 billion.

Among S&P 500 companies, Facebook's return is ranked 34th in performance in the past four years, as of Tuesday. It's been beaten out by huge names like Netflix (NASDAQ: NFLX), Amazon (NASDAQ: AMZN) and liquor-maker Constellation Brands (NYSE: STZ).

That Facebook has been such a powerful force in tech, despite not having the absolute best returns (like Netflix), suggests that there could be more room to go. More room for profits and more performance still could be left on the table.

Among social media companies, Facebook is a stand-out star. LinkedIn (NYSE: LNKD) and Yelp for example, have underperformed the market over the past four years. Twitter (NYSE: TWTR) has been the most troubled and hasn't traded at its 2013 IPO price of around $44 since April 2015.

All that success on the Street has interested investors, too. Facebook is one of the top-20 most widely held stocks among institutional equity investors. In the fourth quarter of 2015, the most recent data available from eVestment, the company was ranked 16th most widely held, behind companies like Alphabet (NASDAQ: GOOGL), Apple (NASDAQ: AAPL) and Pfizer (NYSE: PFE). Facebook is by far the youngest of these "big boy" stocks.

The latest numbers will come from eVestment in the next few days, based on the end of the first quarter. Given the stock's trajectory and earnings strength, Facebook should approach the top 10 most widely held.

After the company's strong earnings, the stock hit an all-time high in April. At least 10 firms raised their price targets , to levels as high as $60.

"We note that over the mid- to long-term FB has various opportunities to layer on new, meaningful revenue streams (e.g., Instagram, video, FAN, messaging, etc.)," Citigroup analysts said in a note.

Messaging has been one huge area of growth. Many tech experts now point to the difficulty for new companies to get their apps featured and downloaded in Apple's App Store. As a result, the opportunity to run chat-based systems within Facebook is becoming the area that venture capitalists are looking to fund more, rather than standalone apps.

The biggest beneficiary of that is Facebook, which may control the ecosystem if every chatbot-based company has to use its platform to get access to users.

Plans for Facebook Messenger that were released at the Facebook Developer Conference in April make it look an awful lot like what's happening with WeChat in China. That is, ubiquitous usage of the Messenger App as a user's interface with the world, not just for social communication. For example, Tech in Asia reported recently on e-commerce options coming soon to the app's users.



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