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Facebook Inc.

Facebook Inc.

This report explores the contents of the Facebook Inc company. It provides a clear history of Facebook. Founded in 2004 by Mark Zuckerberg and fellow students at the Harvard University, the company has grown to be a worldwide social media that have transformed the mode of communication. Through its website, the company is the world’s leading social networking site. The site provides users with tools for immediate interaction and sharing. The site has an estimated one billion active users monthly. This increases the revenue that the company collects through third party advertises. The promoters are inclined to put their adverts on the wall of the site as they are assured that it will receive large viewer majority. The company was incorporated in Delaware the summer of its year of formation and completed its Global Select Market in 2004. During this time, the company had an approximated number of four hundred million plus shares. The shares were valued at a price of $38. This saw the fortunes of the company rise under the lead of Morgan Stanley.

About 25.5% of the company shares are internally owed by the directors and officers of the company. This is in order to ensure security and stability of the company. The CEO of the company owns a total of 32.2% of the shares while the rest is externally distributed. Affiliates such as DST own 5.4% of the shares while Accel partners take the remaining 21.4%. This report tabulates the financial report for the company for the fourth quarter of business operation. The company had an advance of roughly 40% increase in income prior to the previous year. This amounted to approximately $1.585 billion. A result of which can be highly attributed to the increase of monthly active users by a margin of 25%. The number of mobile users was also significantly growing with an increase of approximately 57%. This rate saw the users from 680million to the current and still budging number. The revenue collected from mobile advertising sums to approximately 23% of the company’s total income. Comparing with the last quarter income, this is an increase of roughly 14%. All this revenue is accounted for without the shares. From the initial price of the shares, an improvement of $0.03 has been noted in this quarter as opposed to the last quarter. This was, however, contrary to the expectations of the firm. A reason of for the occurrence can be attributed to a number of firms downgrading their stock. The stiff competition results in the firm having low earning in shares stock exchange.

The anticipation of favourable results for the firm is still growing. An analysis of the future quarters depicts that the firm will enjoy strong revenue growth although at a slow pace. A reduction of compensation charges on the shares will improve the bottom line of the firm. However, there still some risks involved due to the company’s plan of spending and investing on new initiatives. The short term benefits of the initiatives cannot be realised but, once the implementation phase is complete, there are promising long term benefits. Some of the projects that the incorporation is planning to implement include improvement of end-users mobile experience and developing new applications that will be supported by all end-user devices. This will increase the overhead costs of production restraining the margins. The future of the company is bright with the prioritization of long-term success at the expense of short term benefits. It is estimated that the shares of the company will be more stable and appreciate at a constant rate in the coming years.

S&P REPORT FOR FACEBOOK INC

Facebook is the world’s leading Internet Company. These statistics are based on the number of users and dominance in the market. As a result, the company was able to open its shares to the public in the first quarter of 2012. The company’s success can be highly attributed to the analysis done before investment is done. Risk assessment is done on changing technology and user preferences. Others include legal and competitive threats that regulate the global brand and monetization that the company produces. From the news highlights of the company, it is projected that the company’s revenue in 2013 will increase by a 40%. This is an exemplary increase from the revenues of the last quarter. The advertisement business will play a critical role in the achievement of this goal. The company has highly invested at providing modern technologies in mobile monetization and advertisement. The expansion of the company undertaken in 2012 will reflect increased gross profit margins up to 2015. Regardless of infrastructure maintenance and products improvement, it is estimated that the company will meet and surpass it operating cost. The company further yearns to expand its mobile usage to third party companies and intellectual property.

The company has a considerable advantage in social marketing. This is attributed to a well established user base, high engagement levels, and a non restricted access to information. The investment of the company for the year 2013 and 2014 will slightly restrain the company financials. Various risks such as unfavourable user, engagement measures and selling pressure due to approaching deadline lock-ups in legal and regulatory development are factors affecting the company. Setting a yearly target of $31 helps account for the company balance sheet. This is compared with global IT based on estimated 2013 P/E to growth multiples. The company averages its target price and allows a 50% premium. This is meant to account for the company’s position in social media ranking. The company aims at reaching the end-user more by developing interaction platforms that will be deployed with new and competitive technologies. The developers will not be left out as they will be provided with a development platform for creating and enhancing appealing applications and websites. On the other hand, marketers will be provided with tools for developing socially captive adverts.

The company has identified new avenues to market its products. It hopes to penetrate these markets by providing mobile products. Industry litigation and acquisition activities have become a major concern for the Facebook fraternity. The company has patented its products substantially. A focus on the governance of the corporation reveals that the CEO of the company controls over 55% voting power. The company is, therefore, centralised and considered controlled. From an outsider point of view, it can be said that the CEO is both the owner and controller of Facebook. The company still faces some external risk factors as a result of foreign investment. These include but are not limited to control and currency fluctuations; government restricts on foreign investment as well as reduced liquidity, political instability and market volatility.

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