According to a recent study by Capstone Investments, Facebook has lost 1% of their US and European user base over the last 6 months, meaning that not only is the growth of Facebook has stopped, but now declining. Based on this investment study, Facebook’s stock dropped 8% in the last two days.
According to the LA Times:
But the decline in Facebook users isn’t exclusive to the U.S. Maher also said the company has felt a drop in users in 14 of the 23 countries in which it has more than a 50% market penetration. In the nine countries that didn’t see a decline in the social network’s users, Facebook’s growth saw very little change over the last three months, the analyst said.
This does not come as good news, as many people have always said that despite its enormous growth, Facebook may just be an internet fad and is doomed to suffer enormous losses in the future like any fad.
According to the study, another problem seems to be that too much of the fanbase on Facebook is music based:
26 of the top 200 Facebook fan pages are currently brands, indicating most of the growth in Facebook ad revenue has likely come from smaller, performance-based advertisers rather than large national/international brands. Large % Of Brand Pages From Retailers Highlights Retail Opportunity. According to our analysis 45% of the top 100 brand ages were retailers – the top 5 being McDonalds, Victoria’s Secret, Walmart, Target, and Subway. In our opinion, this indicates that retail is a category that can be further exploited at Facebook via new revenue streams. Heavy Concentration Of Musicians In Top Fan Pages Is An Issue. Our data indicates that 85 of the top 200 Facebook fan pages are musicians or some form of celebrity. We believe this is a risk given the recent news that Lady GaGa has raised funding to create her own social network and the likelihood that musicians/celebrities advertise much less than brands.
Bloomberg points to there being issues with Facebook’s inability to capitalize on mobile users, and that perhaps that the mobile growth actually will hurt Facebook
Another concern for investors is the company’s ability to make money from advertisers vying to reach social-network users on mobile devices. Facebook Chief Executive Officer Mark Zuckerberg is focused on adapting his service to mobile devices, where growth in usage is outpacing sales from mobile ads. Bringing Facebook’s features to handheld gadgets is difficult because the user experience is so different than on desktop computers, he said in an interview at the Allen & Co. conference in Sun Valley, Idaho.
Ads shown on mobile phones are smaller and may be less appealing to advertisers and less lucrative than marketing messages on bigger computers. This concern prompted Facebook, just days before the IPO, to advise analysts to lower their estimates for second-quarter sales.