The quick answer would be yes. With 1 in 8 people on the planet registered as users on Facebook, it’s safe to say the social media site has become a powerhouse of networking. Everyone and their grandmother is on Facebook, even if your grandma doesn’t necessarily know the difference between a private message and a wall post. The social networking site has blossomed beyond an experiment in the college social scene and into an internet juggernaut.
Does that mean, however, that Facebook is really worth the $100 billion that investors have estimated it to be? In the final hours until Facebook becomes a publicly traded company, the entire investment world sits on the edge of their seats. The singular aspect that makes everybody a little nervous is nobody knows how going public will change Facebook and how they will make all that new revenue that investors seem to be expecting.
Earlier this year Mark Zuckerberg, CEO and Founder of Facebook, made a statement to potential investors that, “We don’t build services to make money, we make money to build better services.” This goes against what most investors are looking for in a company. The typical expectation would be that when a company goes public that that company should generate continual growth of revenue.
In order to do that Facebook will have to change the way they operate and that will probably mean one thing—advertising. Now nobody wants to be in the middle of stalking their ex online when an ad for foot cream pops up but it may not be as bad as all that.
First of all, Facebook is the one company that knows everything about you. They know your age, your friends, your interests, and even where you live. No other company on Earth is as prepared as Facebook to offer custom tailored ads. Also, it may not mean as many ads as you think. Facebook has approximately 500 million daily active users. That means that if they charge $0.02 an ad and show one ad per person per day for 365 days (that means out of all the times you refresh or check Facebook daily you will only see one ad) Facebook will make $3.65 billion.
At the end of the day, whether or not you decide to run out and buy stock in Facebook is your choice. But whatever you decide, Facebook will certainly be making it into the history books this week.
So will you buy the stock or not? Let us know in the comments below.