Floating Facebook

By The Economist online

Facebook still has plenty to prove

ASSUMING all goes to plan, Facebook's eagerly awaited initial public offering (IPO) on May 18th will be the largest yet undertaken by an internet company. But despite the hype there are good reasons for caution, as the two charts below illustrate. Several high-profile internet firms that went public last year have seen their shares fall below their IPO price and stay there (chart 1). Facebook is admittedly in a different league to the likes of Zynga and Groupon, but worryingly the giant social network has seen a slowing of growth in average revenue per user (chart 2). To boost this the firm will need to find more creative ways of making money from its expanding user base without driving up costs. See article.