Yesterday Facebook, who is rapidly approaching its IPO in May (actual date has not been confirmed but the rumor mill is churning on mid-month) reported that reached nice revenue numbers but managed to see its profits slip 125 from the previous quarter. The New York Times reports
Still, its revenue exceeded $1 billion for the second consecutive quarter, something the company is likely to emphasize when it begins its presentations to potential investors in the coming weeks.
The latest financial figures, disclosed in an amended prospectus filed with the Securities and Exchange Commission, may raise questions about whether Facebook will be able to command a high stock value when it goes public, a number built largely on the promise of continued growth.
I am not a Wall Street analyst and I did not stay at a Holiday Inn Express last night but this is not the kind of news you want to parade in front of potential investors if you are Facebook. Granted, there is plenty to look forward to for Facebook as they finally start to treat mobile with its proper respect but you still have to wonder a bit.
As for getting more users for the service? At what point might they actually have most of the available folks on the planet using the service so the growth of users overall becomes nominal and not a very good measure of the company’s success?
Growth, especially for investors, will have to be about revenue and profits. Unless those users of Facebook are going to open their wallets the sheer volume of people rings as hollow as a Like or a Follow or whatever quantity based metric you want to throw out there.
Advertisers are only going to be interested if Facebook marketing performs. Volume of people on the service becomes the new TV-like measurement for the Internet. It’s the new eyeballs metric. Unless those “eyeballs” are taking action and converting then it all means nothing. Will Facebook’s large audience simply end up being only for big brands to do big branding plays since the cost of reaching that entire group would be too much for 99.9% of the businesses on the planet?
On the plus side, Facebook is positioned to take advantage of a lot revenue opportunities but it is starting to get a kind of Google feel to it. Between mobile changes, privacy matters, patent purchases, political maneuvering and more extra-curricular activities you start to feel that Facebook wants to be all things to all people and that is what ultimately led to Google throwing on the brakes and cutting more than adding as of late.
Like I said, I am not an analyst that is up to my neck in stats etc. I am an observer who sees patterns that can make one wonder a bit, that’s all. Do I hope the Facebook IPO is a flop? No. Do I want it to be a wild success? Really impacts me little. All I want is a service that is making clear moves for the future that can be used to further businesses through effective marketing to strongly identified target markets. Whether Facebook has 1 or 2 billion users is pretty irrelevant to most since not everyone is a potential customer and there is only so much time in a day.
How do you view “news” about Facebook that is more about who will get rich from their IPO than it is about impact to you and your work? Is it worth your time? Let us know in the comments.