Facebook May Already Be More Profitable than Amazon

The company has an operating profit of about 50 percent of revenues

By on October 24th, 2011 10:41 GMT

Facebook is one of the most interesting companies around at this moment - it's still public even though it's valuated at about $70 billion, 43.8€ billlion now and hit highs of over $80 billion, 50€ billion on the secondary markets.

But it's still only a seven year old company that has focused on growth so far and not on revenue. Despite that, Facebook seems poised to be more profitable than Amazon this year.

That may seem daunting considering that Amazon is a retail giant with tens of billions of dollars in revenue in a year. Facebook only sells ads and virtual currency.

But Amazon operates on razor-thin margins, even more so than traditional retailers, while Facebook is highly profitable already.

According to Mike Arrington, TechCrunch founder turned venture capital investor (with a blog) Facebook brought in $1.6 billion, 1€ billion  in revenue for the first half of the year.

Half of that though was operating profit, $800 million, 501€ million for six months of 2011. Those numbers will grow for the final six months of the year, meaning that Facebook could hit an operating income figure of $2 billion, 1.25€ billion.

That may not seem like much for a company valued at tens of billions of dollars and expected to go public next year with a valuation as high as $100 billion, 62.6€ billion.

Compare this to Amazon, a company with a market cap of around $107 billion, 67€ billion, which may get $40 billion, 25€ billion in revenue this year, but with an operating income of probably less than $1.5 billion, 940€ million based on the numbers so far this year.

That said, Google made $3.06 billion, 1.91€ billion in operating income for the Q3 of the year, 31 percent of the revenue for the quarter. Impressive, but not even close to Facebook's 50 percent profitability.

Of course, it remains to be seen whether Facebook will continue to get these rates moving forward, but, considering that it's not growing in user numbers as it used to, the profitability rate may even go up in time.

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