Facebook's US user growth slows to a crawl

Are the social network's best days behind it?

By Jonathan Berr Jun 11, 2012 1:18PM
Image: Couple with laptop (© Daly and Newton/OJO Images/Getty Images)Shares of Facebook (FB) were trading up 2% Monday as investors shrugged off a comScore report showing unique U.S. visitors to the social network in April rose only 5%, the lowest growth rate since 2008.

ComScore estimates Facebook attracts about 158 million unique visitors. The U.S. population is about 300 million, which means everyone who is interested in having a Facebook account already has one, or maybe two or three. The bad news doesn't stop there.

As The Wall Street Journal notes, people are spending less time on Facebook. Users each spent more than six hours on the site in April, which was a gain of 16% from the year before but considerably less than the 23% increase in 2011 and the 57% jump in 2010. This figure is known as user engagement and is critical for website owners because the longer someone stays on a website, the higher the odds he will notice an advertisement.

But Facebook's days of growth are not over. The company has yet to fully exploit the potential for mobile devices, and, General Motors (GM) notwithstanding, advertisers have only scratched the surface of Facebook's ability to promote brands. Nonetheless, those are long-term issues. Investors accustomed to triple-digit gains from highflying tech IPOs are demanding that the company reverse its slowing growth in the U.S. -- its largest market, which accounted for 56% of Facebook's 2011 ad revenue of $3.1 billion.

One way Facebook may address this situation is by allowing users under age 13, who are currently banned from the site, to have pages. The site argues that many underage kids are on Facebook anyway because they lie about their ages. Parents are understandably concerned because of the company's often lackadaisical attitude toward user privacy. Facebook counters that children's pages would be protected by being joined to their parents' accounts. Whether that idea will work remains to be seen.

Facebook's bigger problem is relevance, which is more serious and harder to solve. I have noticed that some of my Facebook friends are posting less frequently than they used to.  Maybe they are busy, or perhaps they have realized that the world doesn't always care about the cute new outfits they recently purchased. The fact that many people's parents -- including mine -- are on Facebook doesn't help matters.

Sites such as Yelp (YELP), which went public earlier this year, and Twitter, which has held off on selling shares to the public, are stealing Facebook's thunder. Like Yahoo (YHOO) and AOL (AOL), Facebook will find it hard to be all things to all people. Facebook CEO Mark Zuckerberg has repeatedly said the company is managing for the long term, which means he doesn't worry about the volatile swings in the company's stock price. That's reason enough to avoid the stock.

Jonathan Berr does not own shares of the listed companies. Follow him on Twitter@jdberr.
 

9Comments
Jun 11, 2012 1:50PM
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 What Zuckerberg means, is he could care less now that he has his money.
Jun 11, 2012 2:32PM
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Maybe people are just realizing there is more to life than social media.  It also probably does not help when Facebook has became a tool for employers, police, schools, criminals and a host of other people for the further invasion of our privacy. 
Jun 11, 2012 2:23PM
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This IPO was a loser from the onset. We have a stock that has  a PE ratio of over 50 ,A lost advertizer GEnral Motors ,and a stock which pays no dividends.So what's the plus side (very little) only a promise of better earnings.Sheesh I can invest is something far more productive like Google,or yahoo,or microsoft or maybe Apple.All of which have PE's of 15-20 and pay dividends. FB is a great bet if you want to lose $$. In addition ,what do they make ---nothing---no product .They provide a service which could go into obsecurity if some thing new comes along.
Jun 11, 2012 4:57PM
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This company went public so the private investors could get out.     If you couldn't see that and you put your money into it thinking it was going to go up then you shouldn't be in the market.

FB sold for $3.53 a share in 2010 on private equity exchanges.
Jun 11, 2012 2:55PM
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I know from many people who use FB, including myself, we are all so pissed off when the timeline was introduced.  At least 50% of the people hate it, and now many of those people will not post or go into FB as long as crappy timeline exists.  These facts are from a poll taken shortly after timeline showed its ugly face.
Jun 11, 2012 9:45PM
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May I repeat what I have been saying from the time a month before this sham of an IPO:

Ask the kids (13-30).  FB is OVER.  O-V-E-R.  They are waiting for the next thing.  And the novelty has worn off for the older kids too.  FB is tedious, a chore to keep up with, and invasive.

The next Big Thing was going to be InstaGram (shorter, sweeter, faster, more fun) but FB was sneaky, saw the threat, and cleverly and quickly swallowed it.

Problem is, there is a newer, better, cooler InstaGram just around the corner.

PS:  FB users---do you know how bad you have been scammed out of your private information so you can be packaged, marketed and sold?  God forbid you have ever posted anything controversial or even anything that makes you look dumb, silly, wild, or unmotivated.  Because after your Dream Job interview (in 5 years) the HR Dept is gonna find it , and guess what---the boring dude/chick in the cubicle next to you with "no life" that didn't post and has no damaging online cement footprints is gonna get it.

PPS: Stock price by the end of the year: Under $10/share as advertisers jump ship and the perpetual, pyramid scheme-like need to add subscribers that don't click on ads or buy products (read: marketing information to sell) slows to a trickle.
Jun 11, 2012 4:30PM
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"One way Facebook may address this situation is by allowing users under age 13, who are currently banned from the site, to have pages."

 

In other words, we’ll do anything to make money. So much for Facebook’s charitable efforts to save the children.  I guess that was all just pre IPO hype too. They want to capture the minds of their users at the earliest possible age, when it’s easiest to manipulate them. In the end, that’s all that really matters to Facebook;  channeling as many people as possible into their virtual world under their control. What next; are they going to lobby all the hospitals to allow them to flash their logo ten times in the face of every newborn the first time they open their eyes? I can hear their argument now; There will be plenty of time for the babies to see their mother’s face later; you know, on Facebook.

Jun 11, 2012 5:23PM
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slows to a crawl? no kiddin? let's blame Bush, and while we're at it blame him for the obama economy, world war 1 and let's not forget 2 and last but not least the kennedy assasination 1 and 2,  2 being bobby kennedy of course, wait!! wait, a couple more, bed bug infestations and the snubing of the chevy volt by the American public, and if there's anything else I've left out u liberal whackjobs please let me know, oh btw ur choice of pres is soooooooo much better! we're doing sooooooo much better now!! look at the growth! look at all the people buying homes!! 2nd homes! 2 more cars!! oh the lavish lifestyles we're now enjoying!! well that where the libs live in a mindless matrix of fantasy land, the rest of us living in REalityland are in dire straights!
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