The world's biggest online social network knocked the world's largest retailer out of the top 10 list of the highest-valued companies in the Standard & Poor's 500 index on Monday and the gap widened on Tuesday.
While the switch is mostly symbolic — nothing specific happened this week to warrant it, and the difference between the two giants is not that big — it signals investors' insatiable appetite for successful tech stocks. Apple, Microsoft and Google top the list of the highest-valued companies in the U.S., and Facebook looks to be on its way to joining them.
A company's market value is calculated by multiplying the number of shares of stock it has in circulation by the current price of one share.
Facebook Inc. was valued at $238 billion at the close of trading Tuesday, according to FactSet. Its stock gained $3.14, or 3.7 per cent, at $87.88.
Wal-Mart Stores Inc. was valued at $234 billion. Its stock dipped 22 cents to $72.57.
Facebook, which is based in Menlo Park, California, has been on a roll this past year, its shares up about 34 per cent in the past year compared with just 8.2 per cent for the S&P 500 index. Its quarterly results have consistently surpassed expectations.
Bentonville, Arkansas-based Wal-Mart, meanwhile, asked for investor patience after its most-recent earnings report showed a 7 per cent profit decline due to the effects of the strong dollar and higher worker wages and spending on its online operations.
Comparing the two companies' financial results, though, shows just how much Wall Street is investing in growth and potential — Facebook — versus existing size and might — Wal-Mart. In the first three months of this year, Facebook's total revenue of $3.54 billion amounted to just a little more than Wal-Mart's total profit for its fiscal first quarter of $3.34 billion. But while Facebook saw revenue grow 42 per cent in the same period, Wal-Mart's declined slightly.
That said, none of the nine companies that follow Apple in the top 10 come even close to the mighty iPhone and Mac maker, whose market capitalization is about $735 billion.