The mysterious world of Facebook finance

The news, or rumour, that Facebook is about go public with an IPO started me wondering again. Where does its money come from?

I am still puzzled as to how Facebook is worth $100billion - or whatever the latest figure appears to be. Where does the revenue come from? Advertising? I had a Facebook account for a while and only once clicked on an ad. I have asked others with accounts if they click on the ads. No one has admitted to doing so. Obviously, my "research" is only empiric but of replicated nationwide would seem to infer that the number of ad clicks is not great. Additionally, the email account I used for Facebook (not my main address) has not been bombarded with spam relating to the subject of the one ad link that I did click - photography, in case you are interested - so Facebook is not selling email addresses.

So where does the revenue come from? Facebook is, at least in the UK, not allowed to sell the information its users input. Similarly, it cannot use the millions of uploaded photographs for commercial reasons so that is not a source of income.

Facebook doesn't sell email addresses; it doesn't appear to use the information or photographs stored on its servers. Despite the occasional rumour that it is going to start charging for use, it boasts that Facebook is free and always will be. A number of large companies ask us to become "fans" on Facebook so does Facebook charge companies for their pages? Even if it does (and I doubt it does) that cannot bring in that large a sum. Apart from raising their profile what good would it do for those companies? Does Coca-Cola or McDonald's, for example, need to raise their profile via Facebook? So, that's not where the money comes from.

Facebook appears to be the latest example of a dotcom company that is valued far beyond its true worth. Remember the 90s? Remember all the people who invested in dotcom companies and then got horribly burned when the bubble burst? I fear the same thing will happen to anyone who invests in Facebook shares, that is, of course, if Facebook does issue an IPO - and, of course, there is no guarantee that it will.