
Facebook First Half Revenue Hits $1.6 Billion - pathik
http://www.reuters.com/article/2011/09/07/us-facebook-idUSTRE7863YW20110907
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shoham
80-1 P/E valuation seems a bit steep to me. I still see this as a $25 Billion
company in the long term, which isn't bad for a site that gets much of its
revenue from display ads.

Here's a list of websites by 2010 revenue:

[http://www.incomediary.com/top-earning-websites-in-the-
world...](http://www.incomediary.com/top-earning-websites-in-the-world/)

You'll notice that just about every site in the top 15 sell goods and services
(physical: Amazon, eBay or digital: Netflix, iTunes) or search ads (Yahoo, and
Google). Display ad based sites languish at the bottom for several reasons,
including the fact that the content of those ads are not what you came to the
site to engage with.

If the numbers are right, then Facebook is bringing in about 1/3 the revenue
of eBay, but analysts on secondary markets and elsewhere are giving it a
valuation twice that of eBay's: <http://finance.yahoo.com/q?s=EBAY> or five
times that of Yahoo's which has twice the revenue:
<http://finance.yahoo.com/q?s=YHOO>

Hopefully people can see through the hyperbole, and find a fair market value
for this company.

~~~
gojomo
Value is more a function of future revenue, and margin, than it is of past
revenue. So upward momentum, which Facebook has and Yahoo and EBay do not,
explains the higher valuation.

Also, valuation comes from the expectation over all possible outcomes. Perhaps
there's a 60% chance Facebook winds up just a $25B company. But there's also a
38% chance that it becomes a $200B Google and a 2% chance it becomes a one-of-
a-kind $400B post-Google monopoly. The weighted average of those outcomes is
$99B, even though your "$25 Billion company" sense remains the modal/most-
likely outcome.

~~~
shoham
My question is "Where is that revenue supposed to come from?". Let's assume
Facebook's userbase doubles in the next year, and tops out/ holds steady at at
1.5 Billion people for the foreseeable future, and that their revenue per user
doubles from $4/year to $8/per year -- there's a reasonable $80 Billion
valuation for you, but where to from there? Investors buy stock they think
will rise in value. Will FB offer a dividend?

Here is the rub with/for FB: The best ads are no ads-- playing the 'Like' game
is cheaper, and more authentic for advertisers. Better than Google's search
results your posts are more social, cost nothing, and show up in between
pictures and posts by friends.

~~~
rokhayakebe
_Where is that revenue supposed to come from?_

It may be possible they create a good mobile search engine and eat Google's
snack.

~~~
wushupork
It may also be possible they may be able to get more revenue per user. Even a
$0.01 increase in revenue per user is substancial given their numbers.

~~~
shoham
Even at 1 Billion users, that's only $10 Million -- less than 1% of what they
made in the last 6 mos.

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protomyth
"Net income in the first half of 2011 came to almost $500 million, according
to the source, who wished to remain anonymous because privately-held Facebook
does not disclose its results."

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bane
Also known as $2.30 per user this half...or about $5/year.

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zerostar07
I am not convinced that facebook's advertising can ever be as effective as
adsense. In fact, i think these numbers represent the revenues from game
developers switching to facebook credits (facebook made it mandatory in july,
but most developers started earlier).

~~~
ig1
How are you defining effectiveness in this context ?

~~~
zerostar07
return of investment? my experiments show that facebook ads are only good for
advertising facebook games.

~~~
ig1
That measure makes no sense for evaluating the effectiveness of any auction
driven ad platform (from the platforms viewpoint), as the price is solely
determined by the advertisers. Obviously someone is getting an effective ROI
at the current prices, otherwise the prices would fall.

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typicalrunt
If I search the article for the word "profit", I get 0 results.

Revenue is all well and good, but what's the profit number? That's a very
important, but missing, part of the story.

~~~
mdasen
The first line of the article has it:

 _Net income in the first half of 2011 came to almost $500 million, according
to the source, who wished to remain anonymous because privately-held Facebook
does not disclose its results._

