Facebook is Cash-Flow Positive

It's been a big week for Palo Alto based Facebook. For those you in the 25-27 age range a little company we once used as thefacebook is doing quite well for itself. They announced they have 300 million users worldwide which is 50 million more than they had in July. In pure sense 1 out ever 22 people in the world have Facebook. I can't think many of other products or services that penetrated the market so fast. Facebook launched in February 2004 and in a mere 5 years has 300 million users. This also represents about 30% of all Internet users. The company has been valued at $5-15 billion dollars over the past few years depending upon how you value companies.

One year ahead of schedule, Facebook is cash-flow positive. In a basic sense Facebook brought in more cash last quarter than it spent for the first time ever. Ironically, even though the mainstream would think the company is banking is has yet to turn a profit. They are a privately held company so they could be hiding it by making huge capital expenditures at the end of the quarter ala Amazon in its early days. Facebook is supposedly bringing in $500 million this year and might even turn a profit after burning through $350 million in cash just last year.

Facebook's future depends on the question that has plagued them for years: How do we monetize our users base? If they can master targeted ads on their site they will be just fine. With their large user base and tons of data pieces going threw their server monetiziing it now should be a problem. Facebook added search into their features over a year ago and has become a destination website. I look forward to the day they IPO so I can see what their books really look like. I'm truly interested into how much money is going in and out of there. How are they not making money or what I think is that they are and just hiding it. Time will only tell.