Facebook Is Rolling In It (Cash)
Like Scrooge McDuck, the world’s largest social network could fill a moneybin full of money and then swim in the money, if it wanted to, judging by financial documents obtained by Gawker.com. Not coincidentally, the documents -- leaked by a “well-placed mole” -- may help supercharge investor demand for a Facebook IPO, supposedly planned for sometime in the first half of 2012.
As of September 2011, Facebook had assets of $5.6 billion and cash reserves of $3.5 billion, according to the documents obtained by Gawker; in accounting jargon that’s a “cubic buttload” of money. Operating cash flow from January-September 2011 was $1 billion, on total revenues of $2.5 billion. Operating income was $1.2 billion and net income was $714 million. On the debit side, total debt comes to a big, fat $0
Scrooge McDuck indeed. Founder Mark Zuckerberg’s 24% stake in the company, if translated into direct, proportional ownership of said assets and income, means he is sitting on a cash pile of $840 million. Of course, his shares in the company are probably worth many times that: some analysts have estimated Facebook’s value at $100 billion or more, which would put Zuckerberg in Sultan of Brunei territory, once Facebook goes public sometime next year.
This also puts to rest any doubts about Facebook’s profitability -- doubts which I expressed in this column as recently as 2010. I stand corrected! Of course, it remains to be seen whether other big social media companies (e.g. Groupon, Pandora) will be able to achieve profitability on anything approaching this scale.
Correction: In yesterday’s Social Graf, I wrote that Expion’s pilot project with H&R Block involves 1,000 H&R Block locations -- in fact it is 100. I also misspelled the name of Expion’s director of sales; it should be Kevin Magee.