Facebook Inc: the Initial Public Offering Essay

1807 Words Apr 8th, 2016 8 Pages
University of Maryland, R. H. Smith Business School

Case Report
Facebook INC:
The Initial Public Offering

Group Members
Ao Zhou
114214195
Zehua Huang 114352699
Emily Buczkowski 112344252

Rui Cao
114368911
Julian Gooch 112364922

University of Maryland, R. H. Smith Business School

Summary
Facebook is an emerging internet-based company which has astonishing growth in the past decade. Its substantial user base, subsequently massive database and pioneer brand image provide Facebook with the profitability base of its business. The main goal in this case is to evaluate the opportunity of investing
Facebook in its IPO. Here we use both DCF valuation and Multiples valuation method to measure if
Facebook is fairly
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With Facebook’s giant user database collected when they register and upload information, advertisers are able to push ads to their target groups, making their advertising more efficient and useful. And as the leading firm in social network, Facebook has a considerable demand for advertising, which means it could enjoy a premium as price-maker.
Additionally, Facebook is the very first company and also the most successful company in social network field. When people talk about social network, the first word comes up into their mind is
Facebook. That becomes an irreplaceable advantage in competition for users and therefore, generates implicit value for Facebook.
Comparative advantages: First of all, as mentioned above, its comparative advantage partly lie on extensive and proprietary database, which can provide a considerable amount of useful relation or information that other competitors can offer for both advertisers and users, and a unique brand image as the founder of social network. What’s more, Facebook has a user base internationally and generates half of its revenue from outside US. None of its competitors could achieve this while they either focus on professional field or are limited in specific regions. Lastly, Facebook’s interactivity in games and apps is among one of the best in the industry. While users attached more games or apps
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