Here is a business analysis of Facebook in 2014. We considered Facebook's financial stability, SWOT analysis, internal and external analysis, business strategy. Prognosis is based on above factors. Comments are very welcome.

1. PAGE 1
ESM #4 - Team Facebook – Jennifer & Lloyd
Facebook
Software Business Analysis & Prognosis
Jennifer
Lloyd
9th October 2014

2. PAGE 2
2004
2006
2010
2012
ESM #4 - Team Facebook – Jennifer & Lloyd
History
Founded
by
Mark
Zuckerberg
in
Harvard
Open
for
everyone
in
the
world
Launched
the
Like
bu<on
Biggest
IPO
in
tech
Market
cap
104
B
2004
2005
2006
2007
2008
2009
2010
2011
2012

3. PAGE 3
ESM #4 - Team Facebook – Jennifer & Lloyd
Mission
“
give
people
the
power
to
share
and
make
the
world
more
open
and
connected”

4. PAGE 4
ESM #4 - Team Facebook – Jennifer & Lloyd
Vision
"People
use
Facebook
to
stay
connected
with
friends
and
family,
to
discover
what’s
going
on
in
the
world,
and
to
share
and
express
what
maIers
to
them."

5. PAGE 5
User
base
expansion
User
engagement
Send
private
messages
and
sLckers,
chat
with
groups,
Facebook
is
the
most
popular
place
to
share
photos
on
the
web.
ESM #4 - Team Facebook – Jennifer & Lloyd
Products & Services
For
thrid
party
developers
to
develop
their
own
apps.
Developer
PlaEorm
and
make
free
calls..
Messenger
Photos
&
Video
Over
75%
of
Facebook’s
daily
users
use
it
on
their
mobile
phones.
Mobile
Content
contribuLon
&
sharing

6. PAGE 6
ESM #4 - Team Facebook – Jennifer & Lloyd
Instagram
$1 billion
• 200
million
monthly
acLve
user
• Strenghen
photo
and
video
sharing
WhatsApp
$19 billion
Oculus
$2 billion
Major Acquisitions
• 600
million
monthly
acLve
user
• Strengthen
instant
messaging
• Enable
you
to
experience
the
impossible
• New
communicaiton
plaTorm

7. PAGE 7
ESM #4 - Team Facebook – Jennifer & Lloyd
- Prognosis –
In
the
next
two
years,
Facebook
will
grow
even
faster,
with
addiLonal
revenue
streams
coming
on-­‐board.

8. PAGE 8
ESM #4 - Team Facebook – Jennifer & Lloyd
Prognosis Inputs
Enternal
Market
Trends
Internal
Strengths
Revenue
–
Current
&
Future
PotenLal
Risks
Summary
of
PosiLves
and
NegaLves

9. PAGE 9
Mobile
adverIsing
revenue
takes
17%
overall
ESM #4 - Team Facebook – Jennifer & Lloyd
External - Digital Ads Market
Mobile
adverIsing
revenue
doubled
from
2012
to
2013,
3rd
year
of
triple
digit
growth
Non-­‐Mobile
Mobile
Total
25.4
30.1
33.2
35.7
0.6
1.6
3.4
7.1
26
31.7
36.6
42.8
45
40
35
30
25
20
15
10
5
0
2010
2011
2012
2013
First
Ime,
online
adverIsing
passed
broadcast
TV.
Online
adverIsing
has
18%
overall
CAGR
from
2010
to
2013
Online
video
ads
takes
7%
overall
and
rapidly
growing

10. PAGE 10
External - Internet Ads Landscape
Internet
Ads
Revenue
in
US
Others Google Facebook
50% 2% 40% 8%
ESM #4 - Team Facebook – Jennifer & Lloyd
Internet
Ads
Revenue
Worldwide
-­‐
Mobile
Facebook
ü Steadily
growing
in
US
&
global
market
ü Rapid
growth
in
mobile
ads
market
Google
Twi<er
ü Dominate
paid
search,
growing
in
US
&
global
online
ads
market
ü Dropping
share
in
mobile
ads
market
ü RelaLvely
small
share
in
US
&
global
online
ads
market
ü Growing
in
mobile
market,
but
slow
Twitter
Others Twitter
Google Facebook
28% 3% 47% 22%

11. PAGE 11
Strengths – Large & Engaged User Base
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q2
2014
ESM #4 - Team Facebook – Jennifer & Lloyd
1400
1200
1000
800
600
400
200
Users
6
12
58
145
360
608
845
1056
1228
1317
0
Avg Daily Time on Facebook
Highlights
1.317 Billion
21 minutes
Total Content Items per day
Total Messages per day
> 4.75 Billion
> 4.5 Billion
Total Likes per day > 10 Billion

12. PAGE 12
Strengths – Numerous Ad Verticals
Vertical Facebook Google Twitter LinkedIn
Demographics
EducaLon
Professional
ESM #4 - Team Facebook – Jennifer & Lloyd
ConnecLons
Interests
Real-­‐Time
LocaLon
One-Stop Shop for all verticals
Highlights
Ability to combine different options for targetted marketing
Semi-Monopoly position – able to raise prices if needed

13. PAGE 13
ESM #4 - Team Facebook – Jennifer & Lloyd
Revenue – Video Ads
Expected
to
capture
3%
of
the
US
TV
Ad
market
by
2016,
from
0%
today
Strong
driver
for
current
revenue
growth
$183
$1,095
$1,825
$2,555
2013
2014E
2015E
2016E
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$
millions
$183
$1,095
$1,825
$2,555
$-­‐
Morgan
Stanley
Video
Ads
Revenue
EsLmates

14. PAGE 14
Future Revenue Stream - Instagram
ESM #4 - Team Facebook – Jennifer & Lloyd
200
mil
Monthly
AcIve
Users
Projected
First
Year
Revenue
$400
mil
76%
Surveyed
Teens
Usage
Piper
Jaffery
Piper
Jaffery

15. PAGE 15
Future Revenue Stream - WhatsApp
ESM #4 - Team Facebook – Jennifer & Lloyd
600
mil
Monthly
AcIve
Users
Current
Annual
Revenue
(Est)
$350
mil
$0.99
Annual
SubscripIon
per
User
Business
Insider

16. PAGE 16
ESM #4 - Team Facebook – Jennifer & Lloyd
Current Revenues
$1,086
Q3
2012
$1,329
Q4
2012
$
1,245
Q1
2013
$1,599
Q2
2013
$1,798
Q3
2013
$2,344
Q4
2013
$
2,265
Q1
2014
$2,676
Q2
2014
$3,000
$2,500
$2,000
$1,500
$1,000
$500
Q
Revenues
$1,086
$1,329
$1,245
$1,599
$1,798
$2,344
$2,265
$2,676
$-­‐
$400 million
+
$350 million
+
+
+

17. PAGE 17
21
ESM #4 - Team Facebook – Jennifer & Lloyd
Risks – Youth Fatigue
8
October
2014
Piper
Jaffery
Survey
21
7
22
12
59
76
45
0
10
20
30
40
50
60
70
80
Facebook
Instagram
TwiIer
Google+
Tumblr
Pinterest
Reddit
Others
Spring
2014
Fall
2014
Facebook
usage
among
teens
dropped
to
45%
Instagram
usage
increased
to
76%
of
teens

18. PAGE 18
ESM #4 - Team Facebook – Jennifer & Lloyd
Risk – Tech Bubble
Risk
of
drying
up
of
VC
funding,
to
companies
who
spend
it
on
Social
Media
Ads.
Industry
wide
effect.
ExperimenLng
with
diversifying
revenue
streams.

19. PAGE 19
Summary of Prognosis
Inputs
External
Market
Trends
POSITIVE
Growing
Online
Ad
Pie
Internal
Strengths
POSITIVE
Semi-­‐Monopoly
in
Social
Ads
Revenue
–
Video
Ads
POSITIVE
Strong
Growth
Rate
Future
Revenue
–
Instagram
POSITIVE
AddiLonal
$400m
and
growing
Future
Revenue
–
WhatsApp
POSITIVE
AddiLonal
$350m
and
growing
Risk
–
Youth
FaLgue
MITIGATED
Instagram
covers
up
Risk
–
Tech
Bubble
NEGATIVE
Industry
wide
effect
ESM #4 - Team Facebook – Jennifer & Lloyd