Facebook IPO shines light on revenue, user growth

SEC filing shows 88% revenue growth from 2010 to 2011 and importance of Zynga

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However, while Facebook is showing great revenue growth, it's not enough to justify the company's expected valuation of $100 billion, according to Rob Enderle, an analyst with the Enderle Group. "They're just not generating enough revenue to drive that kind of valuation. Not even close," he said. "To have a valuation in the $100 billion range, [Facebook] would need to be bringing in more like $10 billion a year in revenue.... But properties like this trade more on excitement and not financials."

Because of that, Enderle warned that investors may be looking at a sharp stock price correction after the IPO hits.

"Pretty much every social network that's come out has dropped below the offering price after their IPO," he said. "The danger here is they can go up rather high and then fall very fast.... So they could be looking at a pretty big correction...."

Wednesday's filing showed that one of Facebook's biggest attributes is its steadily climbing user base.

The company's documents indicate that the social network's user base grew to 845 million users worldwide as of the end of 2011. The company also noted that this past December it tallied 483 million users who were on the site every day, an increase of 48% over the same time frame the year before.

And mobile users are increasingly important. The company reported that in December it had more than 425 million active monthly users who use mobile devices to access Facebook.

"Facebook users are still growing at a pretty good clip. This goes a long way toward explaining its meteoric revenue increase," said Olds. "This means Facebook isn't tailing off and it's not something that users try once and then abandon."

All those users have been racking up a whole lot of status updates, likes and comments.

According to Facebook, by the end of 2011, users had made more than 100 billion friend connections. The company also noted that during the last three months of 2011 alone, people generated 2.7 billion "likes" and comments.

Sharon Machlis contributed to this report.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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