How profitable is Facebook? Since the young company is still private, nobody knows for sure. Still, estimates indicate the social networking giant could already be pulling in more profits than the online retail giant Amazon. If it isn't already, it will be by the end of the year, at least according to unofficial numbers.
Facebook's revenue passed $1.6 billion in the first half of 2011 and saw around $800 million in operating income (although net income was reportedly just under $500 million). Uncrunched points to Amazon's financials for the same time period: $322 million operating income in Q1 and $191 million operating income in Q2, or $513 million for the first half of 2011.
Palo Alto's revenue and profit is rising at an estimated 50 percent clip every six months. In other words, $2 billion in operating income for 2011 is entirely possible.
It's important to remember that revenue and profit are two completely different beasts. While Facebook may be passing Amazon in profit, it's nowhere near when it comes to revenue. Amazon saw a total of $34 billion in revenue for 2010. Facebook's revenue for last year is estimated to anywhere from less than $1 billion up to nearly $2 billion.
Amazon's market cap is $107 billion. Facebook has accepted investments at a valuation of at least $50 billion. The latest valuation from third-party investors was $70 billion, while the highest valuation private markets have given the social network has been $80 billion.
Cue the speculation on whether Facebook is undervalued or overvalued, and remember that Amazon probably deserves the same type of scrutiny.
- Facebook's advertising business: CPM up 60% (report)
- Facebook's revenue doubles to $1.6 billion (report)
- Facebook may have missed revenue projections by $500 million
- Facebook made $1.86 billion from your content in 2010
- Facebook: advertising rates staying constant even as inventory rises
- WSJ: Facebook growth exceeds expectations, $100 billion valuation justifiable