The initial public offering (IPO) for Facebook, the social networking website, generated a media frenzy rarely seen since the dot.com bubble over a decade ago. Those who missed out on Friday's IPO could still buy shares through Tuesday, although the offering produced more press than profit — at least for anyone who was not among the company executives holding shares when sales began. After a short glitch on the Nasdaq, trading took off, but prices stayed constant as investors realized that no one knows what Facebook is worth — a fair question since no one really knows how it is going to make money.
Founded in 2004, Facebook was a Harvard University dorm-room project that captured the enthusiasm and potential of the social networking phenomenon. In less than a decade, the site has attracted more than 900 million users; if it was a country, the Facebook nation would be the third most populous in the world. It generated sales of $3.7 billion in 2011, and they are expected to hit $6.1 billion this year, a 64 percent increase.
But while membership continues to expand, experts are not sure how the company will turn that extraordinary size into money. Last month, Facebook said first-quarter profit dropped to $205 million as sales growth slowed and marketing costs more than doubled. Revenues look set to slow for the third straight year as advertising sales have not kept pace with the growing number of users.