845MM users represents ~12% of total world population (~7B). If you back out under-age (therefore not computer users) and over 65 (same issue), total available population, is ~4.6 billion potential users. At 845MM users, they are nearing 20% saturation. This does not adjust for internet/computer accessibility or poverty. As well, the S-1 did not disclose a user-churn figure (from what could tell) which would further limit the potential pool of available users.

Even if we assume penetration grows to 2.3 billion (or 50% of potential), at current RPU of $4.39/user, that implies total topline revenue of $10.1B or 173% total growth. Therefore the bigger question in my mind is how do they grow RPU and monetize their user base further? This is further complicated by how sticky the product is. People are already using it a tremendous amount, but are not paying for it.

While it don’t disagree that it is highly profitable, with rev growth showing a slow down, and the strangely high cash balances, my question as well is why can’t they deploy that cash more aggressively to accelerate growth. If they have pro-forma $9 bil in cash (and an arguably under-levered balance sheet), why can’t they grow more aggressively?

Likewise, you are starting to see legitimate contenders arise that are taking traffic away from FB, like Pinterest and Tumblr. Both are highly social forms of media, but are eyeballs that are existing outside FB. They also address different questions for users that FB tried to. What do I find interesting, attractive, desirable, presented in a way that makes the user feel like a magazine editor. FB is not well suited to that type of engagement with the user.