Question

Find the value drivers of Facebook and give your suggestions to improve Facebook's value and stock price.

Answer 1

Facebook is a social media network that majorly depends upon advertising revenue to fund its operations. The mobile platform advertising contributes to the major chunk of its revenue and is based on a set algorithm sends specific ads to users based on their browsing history. Facebook is also consolidating a strong financial position on account of Whats app and Instagram whose users are multiplied leaps and bounds. It is believed that Facebook makes around $5-6 per Whats app user per year. Whats app user based has crossed 1 billion which translates into a whopping $6 billion in revenues from Whats app alone.

Facebook can improve its value and stock prices by aggresively pricing its advertising mode of revenue to rake in more profits which will lift up the market sentiment. Also, it must build technology to meet the emerging needs of the internet population to stay afloat. It must more primarily invest in data security to protect privacy and ensure that users remain safe using its platform.