Facebook Inc (NASDAQ:FB)’s market cap of $234.6 billion as of last Friday closing put the social media giant ahead of the valuation of Verizon Communications Inc (NYSE:VZ) and The Coca-Cola Company (NYSE:KO). In terms of debt, Facebook also has far smaller long-term debt compared to the Dow Jones Industrial Average components Coca-Cola and Verizon. Since at least late July 2013, Facebook’s stock price has gone up nearly 200% while both Coca-Cola and Verizon have declined by nearly 0.5% over the same period.
Strong balance sheet
Facebook Inc (NASDAQ:FB) boasts a strong balance sheet with $11 billion of cash and equivalents and just about $119 million in long-term debt. The company has been able to maintain a strong balance sheet despite its recent heavy investments in asset acquisitions.
Facebook spent nearly $22 billion to purchase mobile messaging app WhatsApp and added virtual reality company Oculus RV to its assets portfolio for $2 billion.
In fiscal 2014, Facebook Inc (NASDAQ:FB) generated $12.5 billion of revenue and posted a gross profit of $10.3 billion with gross margins of 82%. The company finished the previous week with $234.6 billion in market valuation.
As of last Friday, Verizon (NYSE:VZ) had a market cap of just about $205 billion. Verizon generated $127.1 billion of revenue in 2014 and posted $77.1 billion of gross profit. The carrier’s gross profit margin for the year was 61% while operating margin was 15.4%, below Facebook’s operating margin of 40%. Verizon has $110.5 billion of long-term debt while its cash position is more or less similar to that of Facebook.
Coke’s debt position
For the beverage giant Coca-Cola, 2014 revenue came in at $46 billion and gross profit stood at $28.1 billion, with gross and operating margins being 61% and 21%, respectively for the year. Coca-Cola finished 2014 with cash and equivalents of $22 billion and $19 billion of long-term debt. At closing of business last Friday, Coca-Cola’s market cap stood at $177.5 billion.
The major advantage that Facebook Inc (NASDAQ:FB) has over Coca-Cola and Verizon is that the social media company isn’t spending huge amounts of money to generate revenue. Last year, all of Coca-Cola’s operating expenses of $18.4 billion were linked to SG&A. That compared to $41 billion for Verizon. However, Facebook’s SG&A spending was just about $2 billion with similar amount going to R&D.