Facebook Constantly Receives Investing News Headlines
Mark Zuckerberg started off small with a little known networking site called www.thefacebook.com, and he initially created the website for Harvard students only. How quickly things changed. For one, the name was changed when he purchased a new domain. The Facebook became Facebook and hit the world on September 26, 2006. It was a social networking site that was available across the globe but how to finance it was the Investing news that many people wanted to read about.
One of the first investing news stories to hit the papers was when Peter Thiel, co-founder of PayPal, invested $500,000 in the fledgling company. His initial investment into Facebook led to business experts projecting that Facebook would be in the top 10 business acquisitions within years. That projection turned out to be false even though there were reports of Facebook in merger talks with other huge companies.
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Facebook makes its money, which allows it to remain a free website, through the use of advertising services. Each time a person clicks on one of the banner ads and makes a purchase, the company receives a portion of the profits. But there is a problem with that. With revenue dependent upon you clicking a banner ad, it can begin to suffer if people do not buy through their advertising services. This is most likely why Facebook had a $3.63 million dollar net loss in 2005. It was spending more to host the website and provide services than it was bringing in.
Enter in the merger and acquisition talks with giants Yahoo, Google and other companies. These huge companies tried to enter into negotiations with Facebook and a bidding war was even started at one time. Zuckerberg issued a statement in 2007 that essentially said that Facebook would not be sold to someone else. Was this the right thing to do? If you compare Facebook’s membership to MySpace’s membership, then you are left with the impression that it is no where near as successful. MySpace has more than double the members and is still a growing entity.
Daily advertising will be the true success and is the only investing news that the company needs to hear. Will it eventually have to close its free membership due to sagging losses in revenue? The media facts point towards this as costs for running Facebook continue to rise but the advertising sales do not. But do not let that stop you from joining the website. For now it is running in the black and is still a great social networking website.
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