Understanding Facebook; Revenue and Growth

Following Facebook’s IPO, it is necessary to evaluate the company’s $68B market capitalization. Whether Facebook is able to meet investor demands in terms of revenue growth is uncertain. Before we can assess Facebook’s growth potential, we must assess its current revenue and profitability.1

More importantly, we must begin to grapple with changing dynamics in Facebook’s advertising outlook, specifically in terms of the rise of mobile adoption, and growth in Facebook’s secondary revenue sources, specifically the growth in its payment platform.

Facebook’s user statistics and revenue

As of December 2011, Facebook claims 845 million monthly active users (901 million according to its April IPO roadshow presentation) and 483 million daily active users, for year-over-year growth of 39% and 48%, respectively. Half of its user-base primarily or exclusively accesses the website from mobile devices, with 425 million mobile monthly active users.

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