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That's not really comparable because banks and insurers require a huge amount of capital to earn those margins. For example, JP Morgan (a pretty well-run and pr
by eigenvalue 10y ago
That's not really comparable because banks and insurers require a huge amount of capital to earn those margins. For example, JP Morgan (a pretty well-run and profitable bank) made a ~32% operating margin in fiscal 2015. But JP Morgan's return on tangible equity (a measure of net profitability relative to capital used) was only ~13%. Facebook, on the other hand, had a return on tangible equity of 25% in the last quarter. And as time goes by, that return on tangible equity should increase quite a bit for Facebook, while it is highly unlikely to improve all that much for JP Morgan because of competition in the banking industry.
- adventured 10y agoVisa is the only financial company I know of with that kind of margin + profit scale. They're nearly capable of 50% net income margins (and $9b in operating income on $13.8b in sales). Also like Facebook they have relatively few employees compared to their immense profit.
- forgetsusername 10y ago>And as time goes by, that return on tangible equity should increase quite a bit for Facebook, while it is highly unlikely to improve all that much for JP Morgan because of competition in the banking industry. But Facebook is also much more likely to disappear due to competition than JP Morgan is.