Facebook. Like 1 billion like.

Some news from earlier in the session, just before the US markets opened was that there were One Billion People on Facebook. One billion users a month. If you follow the link lower down, then you will see the statistics, "Since Facebook launched, we've seen: Over 1.13 trillion likes since launch in February 2009, 140.3 billion friend connections, 219 billion photos uploaded" Wow. And then some interesting user statistics, "Characteristics of users joining the week Facebook hit 1B: The median age of the user is about 22; The top five countries where people connected from at the time we reached this milestone were Brazil, India, Indonesia, Mexico and the United States (NOTE: in alphabetical order); and Facebook now has 600M mobile users"


That is nice. One billion users, I am absolutely sure that every single business on the planet would love to know how many users they have. And I am guessing that in time, through platforms like Facebook, they will definitely know their customers better. If you think about it, Facebook knows more about you than any other advertising platform. More than the government knows about their citizens. So how much would you be willing to pay for all of that information? Well, 47 billion Dollars is the current market capitalisation. Or roughly 47 Dollars a user. That is what investors are paying. On a per revenue basis, with last years revenue of 3.7 billion, Facebook generates less than 4 Dollars per user in sales. And around 1 Dollar per user in profits, net income was a billion Dollars in the last financial year. You could argue that on that basis that the base is still very low, but at 44 times current years estimates and 35 times next years full year earnings, there is a LOT of work for the company still to do. The poor Zynga numbers post the market close are not a good outcome either, Facebook derives around one seventh of their revenue from Zynga. The initial excitement during the trading day turned to disappointment after hours with the Zynga numbers.


Facebook. Not for everybody as an investment, loads of issues with regards to monetizing their huge user base, loads of issues with regards to their mobile platform and a continued "free" service. You won't find pension funds holding these in any meaningful amounts just yet, and I say just yet because I believe their story and the prospects of the company look favourable. I believe that they will change the world, more than they have already. It is going to take a bit of time.