350 Million Reasons for Facebook to Go Public

It took a few more weeks than expected, but Facebook finally announced that it topped the 350-million member mark last night.

Founder and CEO Mark Zuckerberg blogged about the milestone in passing, preferring to discuss new privacy setting initiatives and an end to broader regional networks. Why wouldn't he be doing a better job in trumpeting the new round metric? He has usually been quick to chronicle every time the world's leading social networking site lands another 50 million accounts.

Let's look at the dates of Zuckerberg's previously announced milestones:

Date

Users

8/26/08

100 million

1/7/09

150 million

4/8/09

200 million

7/15/09

250 million

9/15/09

300 million

12/1/09

350 million

Source: blog.facebook.com.

See the problem? Facebook hit the 300 million mark in exactly two months, but it took 25% longer to land the latest 50 million users. Clearly there is no shame in landing that many incremental registrations in just two-and-a-half months. Rivals News Corp.'s (NYSE: NWS  ) MySpace, Google's (Nasdaq: GOOG  ) Orkut, and Time Warner's (NYSE: TWX  ) Bebo probably combined for fewer new users in that time. However, if this is the beginning of decelerating growth at Facebook, it may also be the best time for it to go public.

Everyone else but Facebook appears to be cashing in on the site's success. Electronic Arts (Nasdaq: ERTS  ) , The Knot (Nasdaq: KNOT  ) , and Expedia (Nasdaq: EXPE  ) have paid up to acquire companies that are popular application developers on Facebook's platform. It's time for Facebook to see what the market truly thinks it's worth. Waiting any longer may find the market rally turning or investors losing their appetite if user growth rates continue to decelerate.

There is more to Facebook than just the raw user count, of course. If folks are spending more time on the site or if Facebook is finding new ways to monetize its traffic, earnings and revenue growth may not be decelerating at all! This still doesn't diminish the urgency of going public. The IPO window won't be open forever.

Google and The Knot are Motley Fool Rule Breakers selections. Electronic Arts is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz remembers when social networks were an offline endeavor. He does not own shares in any of the companies in this story. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (4) | Recommend This Article (2)

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  • Report this Comment On December 02, 2009, at 6:18 PM, georcole wrote:

    I have yet to spend one penny, nevermind any larger amounts, on anything on facebook. I use it for free and have no intentions of spending any money there. None of my friends have spent any money on facebook either. I do not click on the ads. I am just there to talk to my friends.

  • Report this Comment On December 03, 2009, at 5:52 AM, sofpan wrote:

    I'm not sure... Facebook is a very clever idea: creating a huge "closed" internet community inside internet. Yes... because it's free is so huge (350 millions) and because it gives clever and easy applications to its users, is so successful.

    The question is how Facebook will succeed to make some good profits. As georcole said, I also don't look at advertisements on Facebook. Maybe Facebook's administration can find solution, like input inside Facebook advertisements like pop ups with no need to "open" them and read them. Who knows?

    Surely, this is a challenge for Facebook administration. To make it trully profitable.

  • Report this Comment On December 03, 2009, at 11:11 AM, Windsurfing1 wrote:

    This might sound a bit futuristic or strange to you, but I think Facebook could be the *big next thing* if it makes the next step to create an alternative virtual universe where people meet. On the long run they will have to team up or buy some sort of virtual reality development firm. If they don't they will be bypassed by a competitor.

    Anyway, as of now, I would participate at an IPO of Facebook.... I did by Google on the first trading day... every banker friend of mine was saying it was overpriced... which made me even more confident. Therefore, if everybody will again roar out "too expensive", it will be a clear BUY to me. .... But let us first wait if they aim for an IPO at all

    Cheers, Carl

  • Report this Comment On December 03, 2009, at 11:21 AM, outoffocus wrote:

    I would think that Facebook makes most of its money from the apps. People may not click on the ads on facebook but EVERYONE I know on facebook uses the apps and I even know people who spend money on the apps. I highly doubt that a developer can just put their app on facebook for free. I think the developers pay a fee to put their app on facebook and keep it up there. Facebook is like the ultimate springboard for web application developers. Even if they don't make money on the specific advertisements, they most certainly make money on the apps.

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