Are you being curios on how Facebook earn money ?
If so, let’s find out. J
There’s a reason why Facebook’s 10-K filing with the U. S. Securities and Exchange Commission (SEC) uses the acronym ARPU, as in average revenue per user. Your account contributed $5.32 to Facebook last year. Congratulations, you’ve been commoditized and you never even knew it. Multiply that by the aforementioned estimated user base, and now you can understand why Facebook stock trades at 110 times earnings and has a market capitalization 10 times the size of its asset holdings. The company’s stock price has doubled since its initial public offering of two years ago, which some people thought even then was unjustifiably high.
There’s a reason why Facebook’s 10-K filing with the U. S. Securities and Exchange Commission (SEC) uses the acronym ARPU, as in average revenue per user. Your account contributed $5.32 to Facebook last year. Congratulations, you’ve been commoditized and you never even knew it. Multiply that by the aforementioned estimated user base, and now you can understand why Facebook stock trades at 110 times earnings and has a market capitalization 10 times the size of its asset holdings. The company’s stock price has doubled since its initial public offering of two years ago, which some people thought even then was unjustifiably high.
When Facebook founder Mark Zuckerberg went looking
for a chief operating officer in 2007, it’s
no coincidence that he selected not an engineer nor a technologist but a vice president with a background in advertising sales.
Sheryl Sandberg had spent 6.5 years selling advertising as a vice president
at Google (Nasdaq:GOOG). Growing Facebook’s user base to the point where
it reached critical mass was obviously important to the company’s operations,
but only to the extent that it provided something to attract advertisers. To an
uninterested observer, committing the equivalent of the gross domestic product
of Honduras to a texting application might sound like the height of dotcom era hubris and recklessness. But it isn’t.
WhatsApp boasts 400 million users, which to Facebook management means an even
greater stock of susceptible minds to sell as a unit to companies looking to,
for instance, move a few more mobile phones this quarter. Every acquisition
Facebook has made since, whether it was $1 billion for Instagram or $19 billion
for WhatsApp, was conducted with the same goal in mind.
Advertising isn’t just a way for Facebook
and its ilk to perhaps earn a little bit of revenue in between hosting family
photos and personal musings.
"Our ability to attract advertisers to our
platform and increase the amount that advertisers spend with us."
and
"Our ability to improve user monetization,
including advertising revenue per timeline view."
So, all of your curiousty has been answered. You
can see how a free apps looks not profitable yet are making money actually.
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