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Facebook's numbers

I like to look at raw numbers every once in a while, without external influence, to recalibrate my ability to judge the magnitude of things.  Here are some of the numbers from Facebook's most recent S-1 filing (published on May 2nd) that I think are important as metrics …

Dustin Curtis

Context & Ripple Effects

Dustin Curtis's exercise in reading Facebook's S-1 metrics without external influence lands two days after the filing itself (May 2) and right as the syndicated coverage has settled on the headline numbers: an IPO range of $28-$35 per share, up to $13.6 billion raised for company and insiders, and a $77-$96 billion valuation that Bloomberg pegs at roughly 99 times profit — richer than all but about 1% of the S&P 500.

The arc behind those numbers matters: Facebook had already climbed toward 700 million users through 2011 and had started saturating the US market by year-end, which is why Curtis's raw-magnitude framing — reach approaching 15 percent of the world's population per the related coverage — collides awkwardly with advertisers' documented frustration with the ad platform.

First-order effects

  • Small investors get their first direct shot at owning Facebook at the $28-$35 range, while Mark Zuckerberg personally sells around $1 billion of stock yet keeps majority control of more than half the company after the offering.

Second-order effects

  • A near-100-times-profit multiple forces every comparable consumer-internet company preparing to go public to be priced against Facebook's bar, and pushes advertisers' frustration over monetization into sharper relief now that the reach-versus-revenue gap is public-record arithmetic.

Third-order effects

  • With US saturation already logged by late 2011, the structural question the filing crystallizes is whether Facebook's growth case rests on international users and mobile messaging — the Messenger read-receipt update and the quick Glancee acquisition (co-founders included, app shut down) both point that way — rather than the saturated domestic base.

The trend: Social platforms are reaching public markets at valuations that price global-scale reach far ahead of proven monetization, making raw user-magnitude math the core of the investment debate.

Related: Frontier capital concentration · Facebook · Facebook Started Saturating The US Market In 2011 · By The Numbers: How Likes & Social Plugins Help Websites · Facebook Climbs Toward 700 Million Users Worldwide

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