A Look at How Facebook Makes Money

A Look at How Facebook Makes Money

New York City : NY : USA | May 26, 2012 at 12:31 AM PDT
Source: PRWeb
Views: Pending

In light of its recent initial public offering, how does the tech giant gain revenue from its 900 million users? Facebook is one of the most visited websites in the world, and is the most popular social network. May 26, 2012

TheNology.com is tech commentary and news site it has looked at “How Facebook Makes its Money” that led to its $104 billion IPO. The article breaks down Facebook’s two major revenue streams, advertising and payment processing fees.

“Many of Facebook’s users know the company is worth billions of dollars, but don’t understand how Facebook makes money because it is free,” says John Stanley, a contributor to The Nology.

Zynga is a major contributor to Facebook’s revenue; this was revealed in Facebook’s SEC filing, “We currently generate significant revenue as a result of our relationship with Zynga, and, if we are unable to successfully maintain this relationship, our financial results could be harmed.”

Due to Zynga’s importance in Facebook’s IPO and revenue streams, The Nology created a chart that shows how Zynga contributes to Facebook’s revenue.

During the hours of trading Facebook’s stock peaked at about $45 and has since fallen below the IPO price of $38 per share. Today, Facebook stock price is at $31.66 per share putting the company’s value under $108 billion.

“We at The Nology believe Facebook’s revenue and business model had a part to play in Facebook’s stock plummeting below its IPO price,” added Stanley.

According to CBS News, some analyst believes that Facebook has been overvalued. Facebook made $1 billion in earnings on about $3.7 billion in revenue. Senior business correspondent, Anthony Mason tells CBS that Apple’s estimated earnings is ten times its stock price, while Facebook’s stock price puts its estimated earnings at 65 times its IPO of $38 per share.

Facebook has made recent acquisitions to expand its presence in mobile such as Instagram, the popular photo sharing mobile app.

For more information on social media, technology and visit TheNology.com, it is reports on current technology trends with up to date commentary on tech, gaming, people and gadgets. The Nology also operates Yeo Answers, a Q&A website.

For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/5/prweb9544364.htm

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Zynga makes popular games that run on social networking site Facebook, including Zynga Poker and Mafia Wars
Zynga makes popular games that run on social networking site Facebook, including Zynga Poker and Mafia Wars
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