New challenges for Facebook after IPO

Facebook held its IPO last Friday in a massive operation: the second most important debut in the history of the US stock market and the largest by the Internet company. In time to attract shareholders, the company founded by Mark Zuckerberg has immeasurable advantages: it is the most used social network with more than 900 million users, approximately half of which logs in every day. In addition, after 8 years of existence, it seems like Facebook does not go out of style: the company announced that in March it averaged 526 million active users daily, an increase of 41% over the previous year. 

However, there are also some drawbacks. As a free platform, Facebook’s main source of revenues is through advertising, and there are some who say that the platform is not the best option for advertisers. This was reflected in the decision of customers like General Motors that withdrew its advertising from the social network seeing the platform as ineffective. Despite this, during last year Facebook’s revenues through advertising doubled to $3,700 million, making the company’s proceeds greater than $1,000 million. 

Another big question that haunts Facebook has to do with its mobile version: while 488 million users regularly log in via their tablets or smartphones, this does not generate income, as this version of service does not come with advertizing. 

The challenge: to increase profitability

Given its recent IPO, the company is not indifferent to the need of increasing its profitability. To the opposite, it thinks of new ways to increase revenues and generate greater optimism among its prospective investors

One of the options is to offer better positioning of its published content by paying a certain amount to make them more visible. This could be a good option for marketing activities, as perhaps due to the format of the social network, it is more profitable for a brand to generate its content from its Facebook page and to ensure its visibility than to pay for a traditional advert in the platform, which users may not notice. 

Another option that Facebook counts on in increasing its profits is creating an application store similar to Apple’s AppStore or Google’s application center. 


The numbers are striking, and the final price of the shares was higher than it was initially anticipated. While in the very beginning it was estimated that the shares would go on sale with the value of $28 – $35, the price raised up to $38 due to high expectations. Facebook could sell up to $422 million in shares, which meant raising $17,974 million. That would give the company valuation of about $100,000 million

With this data, Facebook with become a technology company whose shares has generated most revenues in the market, leaving behind Google that in its time turned in $1,700 million, which is ten times less than $17,974 million the largest social network could raise.

The biggest challenge of Facebook is to succeed in its measures to increase revenues, ensuring rising value for its shares. Proceeds depend largely on exploiting its great potential in terms of advertising given its tremendous ability to segment and direct access to users. Facebook will only reach income necessary for its growth, if it manages to convince the market in its great advantages as an advertising platform.