Facebook revenue momentum in retreat

Mark ZuckerbergMark Zuckerberg-By Jason McELweenie

Facebook has experienced an unexpected fall in profit growth leaving investors concerned over the projected flotation share price.

At the end of this year Facebook will be floated on the stock market and with a speculated price of $100 billion, however is this figure  based on a too optimistic revenue model?

In the first quarter of 2012 revenue fell by 12% with its first negative growth result in 2 years, so many pundits are asking if the initial $5 billion floatation figure is achievable.

Year on year costs thus far almost doubled for Facebook hitting $677 million in 2012 compared with $343 million in 2011 which will give some relief to investors  seeing as Facebook is continually expanding and remodelling it’s services.

Also investments into firms such as the acquisition of Instagram and staff numbers increasing from 1,000 full time employees to 3, 539 over the past 12 months will have an effect of revenue so the slow down in growth does have some explanation.

But until growth resumes there will be many who will question the timing for such investing in costly staff increases, adaptations and assimilations of other sites this close to flotation.

Apparently the first quarterly report for 2012 showed net profit fell from $233 to $205 million and this is what investors will ultimately have to weigh against increased staffing and service restructuring.

Mark Zuckerberg

Mark Zuckerberg-By Jason McELweenie

Image by Jason McELweenie [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

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