Some may be knowing about this,But most don't. I have heard some saying "We are not paying for FB,So how does he earn money through FB?"
Here's How
The "total funding" for Facebook Inc. is the amount of money that outside investors have used to purchase shares of stock in the company from the original owners (co-founders). The founders sell portions of their stock to investors for cash, and then use that cash to help grow the business, hoping to do so efficiently enough for the value of the remaining stock to increase more than the value of the funding that they raise.
Facebook initially sold 10% of their equity for $500,000, and definitely grew the value of the company by much more than that amount -- each time they raise money, they sell a smaller portion of the company for increasingly large amounts of cash. They've done this enough times to have raised $2.4 billion to date.
The stock owned by Mark Zuckerberg, investors, and other Facebook employees gives them a claim on future earnings of the company. While Faceboook is currently using its profits to invest in assets (employees, computers, etc.) that will help it grow, successful companies eventually start paying a portion of their profits as dividends. These dividends will be distributed in proportion to stock ownership share, so that if in 2020 Facebook issues a $500 million dividend, stockholders will get $5 million for each percentage point of the company's stock that they own.
The expected future value of these dividends, appropriately adjusted for the risks of the business and the fact that a dollar today is worth more than a dollar tomorrow, is the value of Facebook as a company. Investors currently estimate this value at about $80 billion, and Zuckerberg's share of this is about 25%
Here's How
The "total funding" for Facebook Inc. is the amount of money that outside investors have used to purchase shares of stock in the company from the original owners (co-founders). The founders sell portions of their stock to investors for cash, and then use that cash to help grow the business, hoping to do so efficiently enough for the value of the remaining stock to increase more than the value of the funding that they raise.
Facebook initially sold 10% of their equity for $500,000, and definitely grew the value of the company by much more than that amount -- each time they raise money, they sell a smaller portion of the company for increasingly large amounts of cash. They've done this enough times to have raised $2.4 billion to date.
The stock owned by Mark Zuckerberg, investors, and other Facebook employees gives them a claim on future earnings of the company. While Faceboook is currently using its profits to invest in assets (employees, computers, etc.) that will help it grow, successful companies eventually start paying a portion of their profits as dividends. These dividends will be distributed in proportion to stock ownership share, so that if in 2020 Facebook issues a $500 million dividend, stockholders will get $5 million for each percentage point of the company's stock that they own.
The expected future value of these dividends, appropriately adjusted for the risks of the business and the fact that a dollar today is worth more than a dollar tomorrow, is the value of Facebook as a company. Investors currently estimate this value at about $80 billion, and Zuckerberg's share of this is about 25%
rep ++
