Facebook Stock Under Pressure: U.S. User Base Declines

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facebook growth slowingAccording to a recent report by Rory Maher, Facebook appears to be losing users in many of its most important markets. Maher, who is the senior Internet analyst for Capstone Investments, told the media that his firm utilized “proprietary software” to analyze Facebook activity in order to determine Facebook user growth in more than 200 countries. Based on the collected data, which was gathered over the past six months, Maher is reporting that Facebook has experienced a 1.7% decline in the number of U.S. users. In addition, Maher’s report suggests that Hong Kong and Singapore also experienced significant negative growth during the same time period.

Although Facebook’s market penetration now exceeds 50% in 23 countries, Maher’s research states that only nine of these heavily saturated markets are currently experiencing growth. The report further observed that the stagnating growth could potentially indicate problems for Facebook moving forward:

“Facebook penetration estimates indicate that growth starts to flatten or decline once a market exceeds 50% population penetration. We believe this could be an issue for future Facebook growth since we estimate that outside of Southeast Asia and some countries in Latin America, most markets are approaching 50% penetration.”

While maintaining growth in Facebook’s heavily saturated markets seems to be a problem, several less saturated countries are continuing to experience strong growth. In the last six months, Facebook users have grown by 60.3% in Japan, 45.6% in Brazil, and 20.3% in India.

Since Facebook’s record-breaking $100 billion IPO in late May, the social networking giant has had many problems and disappointed investors, which has caused its stock to plummet. However, Facebook will have the chance to redeem itself when it releases second-quarter earnings next week. If the earnings are lackluster, investor dissatisfaction and reports of the social network’s lack of direction and leadership will likely continue.

Sources Include: Reuters, Computer World, & The Washington Post
Image Source: Shutterstock

David Angotti

David Angotti

After successfully founding and exiting an educational startup in 2009, I began helping companies with business development, search engine marketing (SEM), search engine optimization (SEO),... Read Full Bio
David Angotti
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  • Jon Loomer

    The expectations are amazing. It seems that even if saturation were 99%, people would freak if Facebook couldn’t get that final 1%.

    A plateau in certain markets due to saturation was inevitable. The key here is that Facebook continues to experience growth in other markets. Eventually, even those markets will become saturated. At that point, it’s going to be more about activity per user and revenue growth than user growth (and really, this is where the focus should be now in the saturated markets).

  • Gabriel Gervelis

    I agree Jon, 50% market share is very impressive. Focusing on the activity per user and revenue per user is key. The gains in other markets show huge signs of growth potential for revenue.

    However, I have to wounder why the 1.6% decline in the US market. Doe’s this have anything to do with Google+ and how they are combining the Google SERPs with Rel=author? Also, It would be nice to have more insight on the “proprietary software” used to get the decline numbers. It’s hard to believe that people would just shut down their profiles and move all of their social networking to a new platform.

    I’m very excited to see their next earnings report!

  • T. Brown of Baltimore

    Personally, I’ve pulled out of FB (as a user) because it’s not getting me anything. The novelty has worn off. I can talk with friends and family by phone, email, or in person. What really bugs me though was the timeline feature. That was a mandatory change and since I have nothing invested in FB, other than three or four years of daily use, there’s no reason for me to stay and play by their rules. I also don’t like how FB is making millions (billions?) of dollars off my time and energy. Well…they make money by selling ad-space to companies hoping that the users will click on the ads, even though the majority of ads are ignored. Finally, the problem was sorting through all the garbage in the news feed. I want my self back, my quality me-time back, so I’ve reduced my internet time to a more moderate level. I have less anxiety and more focus.