Facebook Insider is reporting the loss of 6 million US Facebook friends in May as the number of active users fell to 149.4 million. The social networking site also lost users in Canada, Russia, Norway, and the UK which indicates some significantly leveling off upon market saturation at roughly 50% of a nation’s population. While Facebook’s social dominance is not even close to being questioned, this is widely seen as a red flag for the company’s future.
First off, analysts should not overreact to this news as the sudden drop off could be due to a number of reasons other than the social network not being cool anymore. There really is no simple, definite way to determine whether or not these people are the early adopters which were once so important in building the site especially with the absence of a single new threat for them to migrate to. Perhaps though that could be the new trend, multiple social platforms.
If it were true that the first movers demographic were leaving the social networking site, this might be the beginning of the end for Facebook as we know it. The site would definitely be a destination for older users in the years or decades to come, but as young kids grow up they might opt to go a different route as familiarity is not seen as a major reason to stick with the site.
It is worth noting though that Facebook continues to grow at tremendous rates in countries just getting started with Facebook, and the social network actually added 11.7 million total world wide users last month.
With that being said, if Facebook were on the stock exchange today, and Wall Street reacted to these numbers, then the company’s stock would have tanked with massive amounts of uncertainty. The clock is ticking on the Facebook IPO which is expected in early 2012, but if these slowing growth numbers continue up until then coupled with US user declines, then Zuckerberg could theoretically lose 10′s of billions of dollars throughout the next year simply by waiting to sell out.
-Jeff Rosz
