Facebook Analysis

Carleton D.

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Facebook Analysis

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Abstract

Upon receiving notification of a $500,000 inheritance, financial advisors made several recommendations. However, the inheritance may be best invested in common stock of a publicly traded registered security. After consultation with a financial advisor Facebook, Inc. was chosen as a potential investment. In order to verify that this is a sound investment, an understanding of this investment opportunity is needed. An analysis of the basic background of Facebook, Inc. and the basic background of the Industry in which Facebook operates provides verification of the investment's stability.

The basic background of Facebook, Inc. may be revealed through the sources of revenue, scope of operations, and the size of the company. Facebook Inc. has multiple sources of revenue or customers. The site attains most of its revenue through ads on the webpage. Approximately 85% of the revenue generated in 2011 came from advertising. The remaining 15% was attained through payments and various fees. (Raice)

Zynga provides the majority of the Facebook Inc. payments business. The game provides several games for the site and assists in diversifying Facebook's revenue. An estimated 12% of Facebook's revenue was generated from Zynga in 2011. (Raice) Netflix served as another big customer for Facebook. According to Facebook's IPO filing, Netflix purchased 3.8 million dollars worth of advertising on the Facebook site. This accounts for only 0.1% of Facebook's total revenue. The purchases by The Washington Post accounted for another 0.1% with 4.2 million in ads. (Raice) The size of the company is revealed through the 2011 audited financial statements as well. Facebook, Inc. maintains 5.6 billion dollars in assets according to the report. (Womack) Facebook, Inc. also revealed the scope of operations in the 2011 audited financial statement. The report revealed international operations. (Womack)

Introduction
The basic background of Facebook, Inc
The 2011 report
Tim Berners-Lee
Terms relevant to the internet industry
The current economic condition of the internet
Conclusion

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[...] "Workshop on Internet Economics (WIE2012) Report." Computer communication review 43.3 (2013): 95-100. Curran, James, Natalie Fenton, and Des Freedman. Misunderstanding the internet. Routledge Raice, S. H. A. Y. N. D. I. "Facebook sets historic IPO." Wall Street Journal(2012). Russell, Andrew L. "Histories of Networking vs. the History of the Internet."SIGCIS Workshop, octobre Womack, Brian. "Facebook revenue will reach $ 4.27 billion, EMarketer Says." (2012). [...]

[...] Alliances are key to expansion and audience reach. (Curran, Fenton, and Freedman) The current economic condition of the internet industry during this recession of 2012 and the recovery of 2013 may be explicitly analyzed. During the first quarter of 2012, online retail sales increased by (Claffy and Clark) Approximately 44.3 billion dollars was earned during this period. It marked ten consecutive quarters of positive year-over-year expansion and sex consecutive quarters of multiple digit growth. (Claffy and Clark) Despite the slow economic recovery, the channel migration to commerce accelerated during this time. [...]

[...] (Womack) Over 7 million sites link to Facebook as of 2013. (Womack) In conclusion, an analysis of the background information of Facebook, Inc. and the internet industry reveals the stability of the investment. Facebook is a large-scale company with the possibility of continued growth. The industry has been continuously growing since its beginning. It has even survived the economic recession of 2012 to produce increased revenue. The sources of revenue, scope of operations, and the size of the company combine to reveal a solid background for Facebook. [...]

[...] and the basic background of the Industry in which Facebook operates provides verification of the investment's stability. The basic background of Facebook, Inc. may be revealed through the sources of revenue, scope of operations, and the size of the company. Facebook Inc. has multiple sources of revenue or customers. The site attains most of its revenue through ads on the webpage. Approximately 85% of the revenue generated in 2011 came from advertising. The remaining 15% was attained through payments and various fees. (Raice) Zynga provides the majority of the Facebook Inc. [...]

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