Facebook's Problem in Two Numbers

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Facebook's growth in its most and least-developed markets is not fast enough to justify its still sky-high valuation.

FacebookARPU2.png

12.7 percent

That's the year over year growth in Facebook's average revenue per user in the United States and Canada. It's not the kind of breakneck growth investors expect from technology companies. That's why tech companies have higher P/E ratios than other types of businesses, right? Because investors expect them to generate more money down the line. But perhaps one could make the argument that Facebook's mature in the American market and that we can't expect growth there, even though the company enjoys 50 percent penetration and the world's richest customer base. OK.

15.8 percent

That's the year over year growth in Facebook's average revenue per user in the world outside of North America, Asia, and Europe. If you can't show wild ARPU growth in developing countries and you can't show wild ARPU growth in developed countries, how do you make the argument that you're going to show a ton of revenue growth overall?



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Alexis C. Madrigal

Alexis Madrigal is the deputy editor of TheAtlantic.com, where he also oversees the Technology Channel. He's the author of Powering the Dream: The History and Promise of Green Technology. More

The New York Observer has called Madrigal "for all intents and purposes, the perfect modern reporter." He co-founded Longshot magazine, a high-speed media experiment that garnered attention from The New York Times, The Wall Street Journal, and the BBC. While at Wired.com, he built Wired Science into one of the most popular blogs in the world. The site was nominated for best magazine blog by the MPA and best science Web site in the 2009 Webby Awards. He also co-founded Haiti ReWired, a groundbreaking community dedicated to the discussion of technology, infrastructure, and the future of Haiti.

He's spoken at Stanford, CalTech, Berkeley, SXSW, E3, and the National Renewable Energy Laboratory, and his writing was anthologized in Best Technology Writing 2010 (Yale University Press).

Madrigal is a visiting scholar at the University of California at Berkeley's Office for the History of Science and Technology. Born in Mexico City, he grew up in the exurbs north of Portland, Oregon, and now lives in Oakland.

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