Shares in the social media behemoth Facebook will begin trading on the Nazdaq in just a few hours, signalling a turning point in one of the tech world’s most exciting sagas.
Mark Zuckerberg’s mind boggling audience of approaching a billion users has had investors salivating at its sheer immensity; ‘that many people can’t fail to make us money, surely’.
Ringing the bell to open trading in New York today, the 28 year old hoodie-wearer, whose laid back attire riled Wall Street bankers this week, will open his business to the scrutiny and influence of hard-nosed money men who will expect to see the company’s revenues increase sharply.
Facebook’s share price of $38 per share values the company at just over $104bn, roughly 107 times more than it makes in a year. This has left some commentators scratching their heads at where the pay-off is going to come from.
And following awkwardly timed questions over the effectiveness of Facebook ads, raised this week by General Motors, it’s clear that Zuck’s going to have to do something clever in the near future that A, ramps up revenue drastically, and B, doesn’t alienate the site’s users.
Facebook’s main revenue stream comes through, unsurprisingly, serving targeted ads to users; while Facebook Credits, payments for virtual goods in games like Farmville, also play an increasingly important role, making up 12% of revenue.
Indeed, if rumours are to be believed, Facebook Credits might become even more central to the company’s ongoing strategy as the range of online goods and services they can be exchanged for continues to increase.
The huge number of users, massive levels of engagement and mountainous bins of user data that Facebook boasts will no-doubt make Zuckerberg’s job easier. Financial commentators are upbeat about the IPO, reflecting an impressive degree of confidence in the company’s young founder.
Whatever the plans for growing revenue are, expect to see them rolled out in the very near future, as soon as the IPO dust settles; Zuck’s new partners will want results, and quickly.
