In the Facebook recent SEC filing, the company outlined a whopping “risk factors” that could “materially and adversely affect” Facebook. It’s a comprehensive list of every threat the social network currently faces.
The company’s $5 billion S-1 IPO filing includes a detailed assessment of business risks. These include – its lack of mobile monetization and the fact that it doesn’t own a mobile platform, government restriction of access, inability to maintain its growth rate, and competition from Google+ as well as Twitter and Microsoft.
Risk Factors Summary:
- Our business is subject to numerous risks described in the section entitled “Risk Factors” and elsewhere in this prospectus. You should carefully consider these risks before making an investment. Some of these risks include:
- If we fail to retain existing users or add new users, or if our users decrease their level of engagement with Facebook, our revenue, financial results, and business may be significantly harmed;
- Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;
- Facebook user growth and engagement on mobile devices depend upon effective operation with mobile operating systems, networks, and standards that we do not control;
- We generate a substantial majority of our revenue from advertising. The loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm our business;
- We may not be successful in our efforts to grow and further monetize the Facebook Platform;
- Our business is highly competitive, and competition presents an ongoing threat to the success of our business;
- Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could harm our business;
- Our CEO has control over key decision making as a result of his control of a majority of our voting stock;
- Improper access to or disclosure of our users’ information could harm our reputation and adversely affect our business;
- We anticipate that we will expend substantial funds in connection with tax withholding and remittance obligations related to the initial settlement of our restricted stock units (RSUs) approximately six months following our initial public offering;
- The market price of our Class A common stock may be volatile or may decline, and you may not be able to resell your shares at or above the initial public offering price; and
- The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business;
- Substantial blocks of our total outstanding shares may be sold into the market as “lock-up” periods end, as further described in “Shares Eligible for Future Sale.” If there are substantial sales of shares of our common stock, the price of our Class A common stock could decline.