Now that Facebook (FB) is a publicly traded company on the Nasdaq, one disadvantage it faces is that it will be required to disclose a plethora of information on a routine basis to the SEC and the general public. Facebook will have to deal with the added pressure from investors and money managers to consistently meet revenue/income goals and beat earnings expectations.
According to Facebook's latest S-1, the majority (85%) of Facebook's revenue in 2011 came from selling advertisements. Facebook relies heavily on keeping its roughly 242 million MAUs (monthly active users) online in order to generate advertising revenue. Moving forward, Facebook will need to monetize to survive without going the route of MySpace and losing its most valuable asset, which is its 242 million users worldwide.
Ideally, Facebook could capitalize on the fact that its users are more than willing to share pictures, status updates, and personal information. The best foreseeable way to monetize the wealth of information on Facebook is to segment the data. For example, let's call this idea "Facebook Tabs."
Facebook Tabs would separate your information into different tabs, each with its own privacy settings on one easy-to-use central website and/or mobile app.
- Tab 1: Timeline
- Tab 2: Professional Resume and Work Information
- Tab 3: Likes
- Tab 4: Instagram
- Tab 5: Search Feature
Each tab will have a unique way to monetize, while keeping Facebook users engaged and online longer:
- Tab 1: Advertising Revenue (Facebook will continue to post small block ads on the timeline)
- Tab 2: Revenue from hiring agencies/corporations seeking employees (Facebook can charge companies a fee to post job listings and/or to have access to Facebook users' resumes)
- Tab 3: Coupons/Deals targeted to users who "like" their business (Facebook can allow businesses to send coupons to those users who "like" their page)
- Tab 4: Photo Printing Services (Facebook can set up a photo printing service that allows users to print albums, tagged photos, and Instagrams)
- Tab 5: Paid Clicks -- make an alliance with Google (GOOG) or Yahoo (YHOO) to have a designated tab for searches, which can also include a Facebook user search powered by Google or Yahoo
Although Facebook faces hurdles moving forward, there are ways the company can generate revenue and meet expectations from both its users and investors. Despite the possibilities for this company, Facebook is a "sell" until management taps into new revenue streams and provides more value for shareholders.
Disclosure: I am long GOOG. I am also long GOOG June $600 and $500 puts.