Facebook amends IPO filing: Mobile a growing problem

The changes to its SEC filing come while Facebook execs and bankers are doing the IPO roadshow, trying to sell investors on a $96 billion valuation.

Investors cautious of buying Facebook stock

Facebook today amended its S-1 filing with the SEC to emphasize how the shift of its users to mobile devices is hurting what it can charge for ads, threatening its long-term revenue.

Facebook has already highlighted that it so far has no way to monetize its growing number of mobile users, and today's additions to the document reiterate that issue.

It added the following to the "risk factors" section of the document:

We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.

The company had 488 million monthly average unique users of its mobile products in March. That same month, Facebook started adding its Sponsored Stories to mobile News Feeds as a way to make money from mobile users.

It's too early to tell if that will work, and Facebook is forthcoming about its desire to favor "user engagement over short-term financial results." In other words, it's going to be careful when it comes to pushing certain features onto people's phones and tablets.

"As an example," Facebook writes in one of today's additions, "we believe that the recent trend of our DAUs increasing more rapidly than the increase in the number of ads delivered has been due in part to certain pages having fewer ads per page as a result of these kinds of product decisions."

This trend has continued to date in the second quarter.

About the author

Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.


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