Facebook must prove itself on ads and growth
FACEBOOK will celebrate its flotation with an all-night “hackathon” at its Californian headquarters, a company tradition in which programmers work on side projects that sometimes turn into mainstream offerings.
But after the party the firm will have to focus on proving to investors that it really is worth more than $100bn (£63bn).
Despite being the world’s biggest social network, with over 900m active users, Facebook faces challenges maintaining its growth momentum.
Some investors worry the company has not yet figured out a way to make money from the growing number of users who access the site on mobile devices such as tablets and smartphones where adverts are more difficult to sell.
Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.
Earlier this week General Motors decided to stop buying space on the site, after the company’s marketing executives decided Facebook’s ads had little impact on consumers.
Realistically the site’s seemingly endless growth must begin to slow, with more than a third of the world’s internet users already signed up.
Some financial advisers are concerned by the company’s valuation and have struggled to lower expectations. As one adviser commented: “People want to just own it because they think it’s the next Google and they missed out on that.”
INTERNET IPOs: WHAT IS FACEBOOK UP AGAINST?
Amazon
Date: May 1997
Raised: $54m
Price: $18
First day of trading: Up 30% to $23
Current price: $218
Google
Date: August 2004
Raised: $1.67bn
Price: $85
First day of trading: Up 18% to $100
Current price: $623
LinkedIn
Date: May 2011
Raised: $352.8m
Price: $45
First day of trading: Up 109% to $94
Current price: $105
Groupon
Date: November 2011
Raised: $700m
Price: $20
First day of trading: Up 31% to $26
Current price: $12
Zynga
Date: December 2011
Raised: $1bn
Price: $10
First day of trading: Down 5% to $9.5
Current price: $8.2
FACEBOOK BY NUMBERS
901m monthly active users
526m daily active users
$3.7bn revenue in 2011
$1bn net income in 2011