Mike Isaac

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Facebook’s Latest S-1 Amendment: Yep, We’re Still Weak on Mobile

In a flurry of Facebook news on Wednesday, the company submitted yet another amendment to its S-1 filing to the SEC, further outlining its weaknesses in the mobile realm.

The amendment is small, yet highlights an important vulnerability in the company’s ads business. The company’s daily active users — or DAUs, in Facebook parlance — has grown fast over the past year. But the corresponding number of ads delivered isn’t matching the pace of the DAU growth. In strictly economic terms, that’s no bueno.

But as Facebook points out in its risk factors section, it’s all because of mobile. More than half of Facebook’s 900 million monthly active users (or MAUs) are accessing the site on a mobile device. But unlike its desktop ads business, the company has yet to truly monetize mobile. As Facebook writes in the S-1 update:

“Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results.”

Mobile ad delivery isn’t a simple solution. Unlike a desktop computer, there’s only so much screen real estate one can utilize to deliver an ad on a smartphone. And Facebook has only just started rolling out targeted mobile ads.

But as Zuckerberg reminds us in his founder’s letter attached to the original S-1 filing, Facebook is in it for the long haul. The company “prioritizes user engagement over short-term financial results,” not willing to stay beholden to the almighty shareholder ire over the course of quarterly earnings calls.

So essentially, it’s a nuisance that Facebook isn’t worried about fixing in the short term, but is obligated to point out to its forthcoming slew of new investors as the company’s IPO approaches.

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google