Facebook

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Facebook Inc. is a US social networking site that lets users share information, post videos, post photos, play games, and generally let users connect with each other through available online profiles. Facebook allows outside developers to build applications that integrates with Facebook from where users are able to access the site. Facebook has more than 901 users with about 526 million users using the site on a daily basis. Facebook was launched by Mark Zuckerberg in 2004 from his Harvard University room. Zuckerberg started an online version known by then as Harvard Facebook (and the name comes from freshmen’s or major’s face’s books and hometown that are circulated to students). By 2012, Facebook had started trading as public company after an IPO. The company is currently headquartered in Menlo Park, California. The company has 4,331 full time employees with Mark Zuckerberg as the group CEO. The company’s stock ticker symbol is FB and trades in the NADAQ stock exchange. 

Analysis of FB

Facebook Inc offered an Initial Public Offering (IPO) on 18th May, 2012 at $38 per share. The shares are trading at NASDAQ. Immediately after the sale, the shares gapped to a higher of $45 and later slumped to a lower of $25 before later drifting to $32. The company has however weathered many storms to post impressive profits last month. The company has regained its dominance in the industry as a leader due to its personnel, and financial strengths thus decreasing investor as well as business risks. According to the above information, Facebook has a consistent operating result. 

2012 2Q FB Financial Analysis

In the 2nd quarter of 2012, Facebook incurred large amounts of expenses that resulted to a -0.6B net earnings before factoring in depreciation. Revenue grew by 45% in the 2nd Quarter of 2012 as compared to a 12% from the previous quarter. The main source of loss was the $1.56B that was incurred as operational expenses. 

According to a report by Rick Summer in the Morning Star, Facebook Inc. is in the process of building the foundation to be in a position to revolutionize online advertising. But this ambitious plan is halted, at least for now, by lack of near-term visibility and lack of clear advertising metrics. This has the impact of stalling revenue as well as profitability. Summer sees that in the future, Facebook and Google will be the dominant players in the advertising market. This can be attributed to the trove of data on Facebook users, as the company races to build new revenue flows. This makes Summer see Facebook as being poised for a massive revenue with a wide economic clout especially from its communication layer and social graph. 

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