Facebook Is Hemorrhaging Users

I haven’t been a fan of Facebook‘s ($FB) stock. Now there’s evidence that Facebook has been losing millions of users. It turns out that FB is just not cool anymore:

Facebook has lost millions of users per month in its biggest markets, independent data suggests, as alternative social networks attract the attention of those looking for fresh online playgrounds.

As Facebook prepares to update investors on its performance in the first three months of the year, with analysts forecasting revenues up 36% on last year, studies suggest that its expansion in the US, UK and other major European countries has peaked.

In the last month, the world’s largest social network has lost 6m US visitors, a 4% fall, according to analysis firm SocialBakers. In the UK, 1.4m fewer users checked in last month, a fall of 4.5%. The declines are sustained. In the last six months, Facebook has lost nearly 9m monthly visitors in the US and 2m in the UK.

Users are also switching off in Canada, Spain, France, Germany and Japan, where Facebook has some of its biggest followings. A spokeswoman for Facebook declined to comment.

“The problem is that, in the US and UK, most people who want to sign up for Facebook have already done it,” said new media specialist Ian Maude at Enders Analysis. “There is a boredom factor where people like to try something new. Is Facebook going to go the way of Myspace? The risk is relatively small, but that is not to say it isn’t there.”

Facebook is due to report earnings tomorrow. Wall Street currently expects FB to earn 57 cents per share this year (down from 66 cents per share three months ago) and 78 cents per share in 2014 (down from 87 cents per share three months ago).

I think Facebook will continue to be profitable. To me, the big issue is the rapid growth that people expect. If the stock is going for 47 times this year’s earnings, that means the market expects very strong growth for years to come. I’m not sure that will come.

Posted by on April 30th, 2013 at 9:59 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.