In partnership with Glassdoor, our investment analysts are taking a closer look at some of the most popular companies in Glassdoor's career community.
As the world's largest social network, Facebook (NASDAQ:FB) has arguably been the most important trendsetter for the nascent category. As the forerunner, Facebook has handled this pressure expertly. While the company has made a few mistakes along the way, the social network has also set the bar exceptionally high in some of the most crucial areas. This is particularly clear when you consider Facebook from the perspective of its four most important stakeholders: customers, employees, investors, and the world at large.
Handling customer data with care
Overall, Facebook provides an incredibly valuable service to customers. In fact, the company's social network of 1.32 billion monthly active users (and growing) has downright changed the way we communicate, making it easier than ever to stay in touch with family and friends. Facebook's social platform alone, therefore, is an act of goodwill for customers.
But any company that is in the business of monetizing user data is walking a fine line. This is simply the nature of digital advertising.
The most common error built into Facebook's business model is the fact that users will sometimes be shown ads that simply aren't relevant to their lives -- or worse yet, some that are aggravating. But given the inevitability of this problem, users and the media will always likely be forgiving here, as long as Facebook is always continuing to try to improve the customer value of the ads shown on its platforms.
But the public will be less forgiving of unethical handling of customer data. Indeed, Facebook took heat on this front earlier this year when the social network revealed a paper by the Proceedings of the National Academy of Sciences that detailed an experiment in which 700,000 newsfeeds were manipulated to show different levels of positive and negative messages to see how it affected the updates users would post. Shortly after the study was published, Facebook received a backlash of criticism that asserted the social network was manipulated emotions. Facebook employee Adam Kramer, who was involved in the study, quickly offered a public apology on his newsfeed.
In spite of occasionally slipping up on matters of user data, the company has mostly set a solid standard for peers in this important area. For example, though Facebook advertisers can reach highly targeted user groups based on user data, this information is kept anonymous and secure from advertisers. Or another example: Facebook has made it increasingly easier for users to share updates with specific and targeted audiences.
Corporate culture is strong at Facebook. In fact, it's often cited as one of the key reasons for the social network's rapid success. From the company's elaborate employee orientation that goes far beyond the involvement of the human resources department, even including longtime employees among those leading the orientation, to the many social activities employees are highly encouraged to take part in, like intramural sports teams and happy hours, Facebook aims to create a culture that attracts and keeps great talent.
Taking a page from Google's enviable corporate culture playbook, Facebook makes employee autonomy key, completely displacing the bureaucratic culture that dominates many big companies.
"We don't have rules. We have values," reads Facebook's career page -- a statement that is spot on, based on a glance at some of the employee reviews at Glassdoor. While the company does have layers of management, Facebook has kept the corporate structure decentralized and nimble enough to encourage fast-paced innovation.
Data at Glassdoor suggests Facebook employees are happy with their jobs. Of 746 employee reviews, the company has an overall rating of 4.4 stars out of a possible five. The rating is based on five factors: culture and values, work-life balance, senior management, compensation and benefits, and career opportunities.
Two other insightful tidbits from Glassdoor worth noting:
- Facebook CEO Mark Zuckerberg has garnered an impressive 95% approval rate from employees.
- Employees rate Facebook's compensation and benefits 38.3% higher than the average compensation and benefits at other companies.
Creating long-term value for shareholders
Shareholders who bought Facebook stock at prices near its initial public offering price of $38 in 2012 have been handsomely rewarded, with the company outperforming the S&P 500 by a long shot.
But is there still potential for shareholders to earn market-beating returns in the years to come? For investors, this question matters the most.
While the rosy and optimistic valuation that Facebook stock trades at today is often eyed dubiously, the durability of the business and Zuckerberg's excellent leadership so far show clearly why the stock deserves an exceptional premium. Plus, Facebook's monstrous revenue and earnings growth in the last year quickly provide meaningful perspective for the stock's wild price-to-earnings ratio of about 81. In Facebook's second quarter, net income was up 147% from the year-ago quarter, hitting $562 million. Facebook's second-quarter revenue of $2.91 billion was up 61% from the year-ago quarter.
Living up to current market expectations will require Facebook to continue to take advantage of key growth opportunities. The company's primary opportunity to rapidly grow its business in the coming years remains the evolving and fast-growing mobile environment. Fortunately, Facebook has proven it can tackle this opportunity head-on. Consider, for instance, that its mobile advertising revenue in the second quarter reached 62% of total revenue, up from 41% in the second quarter of 2013 and from 0% two years ago.
Making a meaningful impact
Facebook wants to play a crucial role in helping people by bringing affordable online access to the two-thirds of the world not yet connected to the Internet. The company has been taking aggressive steps in this effort through its Internet.org partnership.
Internet.org already has some aggressive projects under way, including the exploration of high-altitude, long-endurance planes, satellites, and lasers for bringing Internet to underserved communities globally. Initially, the focus of these technologies will be the 10% of the world's population in areas that are difficult to reach with traditional Internet solutions.
So far, Facebook has been liberal in the energy and resources it is putting into seeing its Internet.org mission through. The company's big vision to bring Internet solutions to the rest of the world shows it is focused on more than its own immediate profits and stock price.
Facebook has proven that it is willing to go the extra mile in acting ethically for key stakeholders. Its track record of valuing customers and employees while still providing value for investors and pursuing a noble cause to connect the rest of the world make Facebook one of America's best companies.
Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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