You use it, your friends use it as do 845 million others. Now the company is about to go public which means you can own a slice of the remarkable success story that is Facebook. But is it a good idea to buy Facebook shares?
As reported by James Andrews from Yahoo!Finance, Facebook has thrown open its books ahead of its first public share offering and we can see for the first time how the company that hundreds of millions of people use every day works.
More than that, we will soon have the chance to get our own piece of that pie. But should you?
We take a look at the key things you should think about before you decide you would like a share in Facebook.
Firstly, unlike many young technology companies Facebook makes money. Quite a lot of it. And it’s growing fast. The company Mark Zuckerberg founded in his room 8 years ago made $1 billion last year, that’s up from $606 million the year before.
Most of that money comes from adverts – 85% of it to be exact. This is down on 2009 (98%) and 2011 (95%) but still makes up the vast majority of income. Another 12% comes from gaming platform Zynga – which you can buy shares in now.
Given a potential $100 billion valuation, that means Facebook is far from a cheap share and not one people should be looking at to pay an income. Especially as that’s not what all-powerful founder and biggest shareholder Mark Zuckerberg thinks the business is about.
“Facebook was not originally founded to be a company. We’ve always cared primarily about our social mission, the services we’re building and the people who use them,” he said in a letter to potential investors.
“We don’t build services to make money; we make money to build better services.”