Five Questions Every Facebook Investor Must First Answer

Posted by Ian Cooper - Wednesday, January 12th, 2011

From The Big Picture:

"If and when Facebook goes public, they must monetize their user base — I find it hard to see how they do that without annoying their base of users away. Mine is a decidedly non-consensus viewpoint.

The free web app has to figure out a way to have the site generate revenue and profits from its immense user base. Currently, they generate about $ 1 billion dollars in revenues at about a 25% margin.

The challenge for FB is that as a free site, there is a dynamic tension between the users and the people who seek to monetize those users. The 15-25 year old demographic is well represented on Facebook, and while advertisers want to reach them, they don’t have all that much discretionary income.

But most intriguing for potential FB investors are the Facebook numbers:

How accurate are they?"

Read more here.


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