GO
Loading...

Inside Facebook's Money Machine

A Facebook Inc. IPO announcement flag flies outside of JPMorgan Chase & Co. headquarters in New York.
Peter Folley | Bloomberg | Getty Images
A Facebook Inc. IPO announcement flag flies outside of JPMorgan Chase & Co. headquarters in New York.

There’s been a lot of talk about Facebook’s valuation, but the real question behind that valuation, is how Facebook makes money and what its prospects are in the future.

First: The value of Facebook’s reach shouldn’t be underestimated. Facebook had 901 million monthly active users at the end of the first quarter — and it turns those users into dollars, primarily by showing them ads.

It had 526 million daily active users at the end of the first quarter, 41 percent more than the prior year. Users generated an average of 3.2 billion likes and comments per day in the first quarter, and there are more than 125 billion friend connections.

One key number: mobile is a huge driver of growth — the company now has about 500 million monthly average users. That’s a potential source of revenue growth, but also a challenge.

Read more ...

Symbol
Price
 
Change
%Change
FB
---

Featured

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.