The value of the stock traded at the NASDAQ is dependent on the efforts that the company makes in achieving a competitive edge in the market. Investors are attracted to companies that have promising efforts in the market. The management of the companies, therefore, pursue expansion efforts both locally and the international market. Investors are also skeptical in new startups, and this makes it necessary for the stock to have lower values that appreciate as the companies position themselves in the market. It is also noteworthy that various external factors are beyond the influence of the management that affects the value of stock in the market. Any external activity that negatively affects the operations leading to reduced sales leads to low closing costs. On the other hand, factors that increase the demand for products and services lead to improved revenues and consequently a rise in the value of the shares.
This analysis will involve two companies, Apple and Facebook which are publicly traded in the United States. Apple is a leading manufacturer of consumer electronics in the United States, and it has an expansive market throughout the world. The company is hailed as being a household name in the United States, and its products are perceived to be ostentatious. Although the industry is highly competitive, the company has managed to capture and retain a significant market share. The value of the company at the NASDAQ has grown consistently over time particularly due to the expanding revenue. Facebook, on the other hand, is the world leading social site that evolved from being a regional to a global platform. After its inception in 2004, the corporation has grown its assists and revenues. Currently, it is used by more than 2 billion people in the world, and the users continue to increase particularly due to the adoption of smartphones by more people across the world.
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Fig1: A graphical representation of the value of the two companies’ stock at for five days
From 29 th August to September 2, 2017, the companies have traded heavily on the NASDAQ. The closing stock for Facebook was $166.24 and $168.17 on 29 th and 30 th August respectively. This increased to $170.40 on 31 st and closed at the same value on 1 st September (NASDAQ, 2017). However, the value dropped slightly to $172.07 on 2 nd September. Apple, on the other hand, closed at $160.06 and $163.79 on 29 th and 30 th September respectively. The value rose gradually on 31 st August to close at $163.94. On the first day of September, the stock value closed at $164.80, and this dropped to 162.04 on 2 nd September (NASDAQ, 2017).
Five years ago, the market position and share for the two companies was fairly different, and this is evident from the closing value of shares during a five-day period. On 29 th August 2012, Apple closing stock value was $96, and this dropped to $94.83 the following day. The closing value on 31 st August 2012 was 95.03 while the following two days closing value was $96.42 and $95.75 respectively. Facebook, on the other hand, had a closing stock value of $19.1 on 29 th August 2012 and on the following day the closing stock was $19.08. The other three consecutive days had closing values of $18.08, $17.72, and $18.58 respectively (NASDAQ, 2017). A comparison of the stock values in the two periods is a clear demonstration of the transformations that the companies have undergone.
Fig2: A graphical representation of the value of the two companies’ stock at for five days (Red-Apple Blue-Facebook).
Various external factors have led to the transformations observed in the two corporations. First, an increased number of people have adopted the use smartphones, and this has increased the consumers of the products and services offered by the two companies(Menzel,2013). For instance, only 463 million people in the world were using smart phones(Feng, 2017). These formed the bulk of the people using Facebook to communicate. Currently, more than 2 billion people are using smartphones. This external factor has affected the two companies in various ways. Facebook has received an overwhelming registration of new members who have acquired smartphones to hit a record high of 2 billion users(Feng, 2017). On the other hand, the sale of Apple smartphones has increased as people adopt devices that enable them to communicate on the social platforms. The company’s smartphones control about 54% of the market in the United States. The expansion of the companies attracts investors who buy the shares at higher prices.
Secondly, the value of Facebook’s stock increased in value when the company acquired other social media namely Instagram, Oculus, and WhatsApp in 2014. Also, Facebook acquired Crowd Tangle in 2016. The company which was acquired for an undisclosed amount would allow the company to exploit the social analytics to track content spreads on the online platform (Chaykowski, 2017).The move attracted investors who perceived the company as having a viable growth. The demand for shares resulted in increased value. Although these can be identified as the result of an internal decision, it was triggered by the technological innovations in the country. The acquire companies provided an opportunity for Facebook to become more efficient and respond to the clients’ needs.
Apple has benefited immensely from the increased sensitivity that people have towards the security of their communication. Greater use of technology has come with intensified hacking and infiltration efforts. For the last four years or so, individuals who value the confidentiality of their information have been looking for safe devices (Wenzel & Voigt, 2016). Apple has been using this external factor as a major selling point for its devices. This has increased the number of sales and a consequent revenue growth. As noted, investors are attracted to companies that make consistent profits and sale margins.
Conclusively, the value of the stock at the NASDAQ is dependent on the growth of a company regarding revenue and market share. Investors are sensitive to the implications of external factors on the operations of a company and analysts use the economic impacts to predict the future of companies. Facebook and Apple stand out as some of the biggest corporations that trade on the NASDAQ. The value of their sales currently is a reflection of the transformation that they have undergone in the last five years. Apple has maintained a consistent market growth both in the United States and across the globe. Facebook, on the other hand, has emerged to be the biggest social website with more than 2 billion users(Rashid & Kwon, 2015). The increased of smartphones has resulted in positive growth for both companies as people purchase user-friendly devices to communicate effectively through the social sites. The current value of the stock is not expected to drop but continue growing as more people embrace technology in communication.
References
Chaykowski, K. (2017). Facebook Reports Strong Second Quarter; Sales Growth Beats Estimates. The Forbes Magazine. https://www.forbes.com/sites/kathleenchaykowski/2017/07/26/facebook-reports-stellar-second-quarter-revenue-earnings-beat-estimates/
Feng, R. (2017). The World’s Biggest Public Companies. The Forbes Magazine. Retrieved from https://www.forbes.com/companies/facebook/
Menzel, A. (2013). How well placed Apple is to sustain its recent success in the Consumer Electronics Industry.
NASDAQ. (2017). Facebook, Inc. Class A Common Stock Historical Stock Prices. Retrieved from http://www.nasdaq.com/symbol/fb/historical
NASDAQ. (2017). Apple Inc. Common Stock Historical Stock Prices. Retrieved from http://www.nasdaq.com/symbol/aapl/historical
Rashid, S., & Kwon, W. S. (2015). How Consumers Form Attitude towards A Brand's Facebook Page from Friends'" Likes"?.
Wenzel, H., & Voigt, S. (2016). Correlation between Corporate Culture and Corporate Strategy: Google vs. Apple and Daimler vs. Siemens . GRIN Verlag.
Yang, S. H., Nam, C., & Kim, S. (2017). The effects of M&As within the mobile ecosystem on the rival's shareholder value: The case of Google and Apple. Telecommunications Policy .
