Facebook (NASDAQ:FB) is exploring a wide range of cash generating business, such as video advertising and music downloads, but must get rid of the growing problems that marked its first quarters as a listed company, according to Bloomberg. Income and sales downturn has increased the pressure on Facebook to find new ways to increase business.
At the same time, the largest social network in the world has to calm fears of personal data confidentiality, attract investors and comply with Chief Executive Officer Mark Zuckenberg’s commitment whereby Facebook is a social movement rather than a business.
“It’s a fine line that they have to straddle. It’s all part of the growing pains,” said Victor Anthony, analyst at Topeka Capital Markets Inc.
Instagram, Facebook’s photo-sharing service, has caused concern last month that it would sell images of users without their consent to advertisers. Facebook also dissatisfied by its decision last month to reduce the influence of users in changing their privacy policies and use of data.
Given the fact that Facebook uses users’ data to help advertisers, Zuckerberg risks to turn customers away and compromise his commitment to more openness. Facebook is already under regulators’ scrutiny in Europe and the United States because of concerns that it does not sufficiently protect users’ personal data.
Facebook shares have recovered in September a portion of losses from the listing on the stock exchange, but are still 16% below the IPO. Analysts expect for this year a revenue growth of 30%, to $6.53 billion, compared to an estimated grow of 35% in 2012.
According to Zuckerberg, the money is not the main focus of Facebook. “We don’t build services to make money. We make money to build better services. Facebook was not originally created to be a company. It was built to accomplish a social mission,” Zuckerberg outlined Facebook’s IPO plans in regulatory filings.
Facebook has shown, however, that it can quickly introduce successful products. Facebook shares were up 60% from a low of $17.55 per unit reached in September, following clues of mobile advertising growth.
Facebook could report revenue of $339.3 million from advertising through mobile applications for 2012 from zero last year. In 2014, this revenue could exceed $1.2 billion, and Facebook could control 11% of the market, according to market research firm eMarketer.
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