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The Reformed Broker

Facebook is profitable, despite what you hear

Facebook has been growing since its IPO last year, and advertising revenue for the company increased 61 percent from last year. Facebook is making a lot of money now and starting to deliver on the promise of its IPO.

By Guest blogger / July 26, 2013

A sign seen at Facebook headquarters in Menlo Park, Calif. Facebook reported quarterly earnings on Wednesday, July 24, 2013, and the company has raised its advertising reveue considerably since going public last year.

Ben Margot/AP/File

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The narrative since the Facebook IPO has been that the company had done the bulk of its growth prior to coming public and the valuation had already reflected it.

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Joshua has been managing money for high net worth clients, charitable foundations, corporations and retirement plans for more than a decade.

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Advertisers were not "getting" the platform or particularly excited by the prospect of branding as opposed to the more performance-driven click-and-buy-something they get from Google.

In addition, mobile was going to be a headache for the company because even if they "figured it out", a mobile click was not worth as much as a desktop one.

This morning the stock opened higher by 30% because they have largely been able to do the most important thing - demonstrate profit growth despite these "headwinds."

In my mind, the most important stats are these two (via CNET):

More than 1 million active advertisers. Facebook's bread and butter. The company said there's a lot of growth here, with local businesses leading the charge.

$1.81 billion in revenue. As expected, the biggest chunk of the revenue, $1.6 billion in fact, came from advertising. Advertising dollars increased by 61 percent from last year. About 41 percent of that $1.6 billion came from mobile advertising. The rest of the revenue, $214 million, came from payments and other fees. This figure mostly reflects money from game payments, which Facebook said are up by 7 percent.

That's a business, guys.

Facebook is making a lot of money now and starting to deliver on the promise.

The long-term negative is that I still think the company becomes AOL as new generations skip it and go right into buildng their own networks and sites outside of the walled garden. But that's a ways off and in the meantime, a billion users is a billion users.

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here.To add or view a comment on a guest blog, please go to the blogger's own site by clicking on www.thereformedbroker.com.

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