Has Facebook started its inevitable decline?

Posted by Trent Nouveau



A recent report published by analysts at Capstone has confirmed that US users of Facebook declined approximately 1.1 percent over the past 6 months.



According to analyst Rory Maher, of 23 countries where Facebook had at least 50 percent market penetration, growth was little changed or down in 14 nations over the past three months.



Has Facebook started its inevitable decline?"This could be an issue for Facebook growth since we estimate that outside of Southeast Asia and some countries in Latin America, most markets are approaching 50 percent penetration. [Meanwhile], Japan and India have grown users 60.3% and 20.3% over the past six months," Maher said in a statement obtained by Bloomberg and Barrons. 



"The heavy concentration of musicians in top fan pages is [also] 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."

Facebook, which last reported over 900 million users, has grown exponentially since going live in 2004. In May, the social networking site kicked off an initial public offering that valued the company at more than $100 billion.



However, the stock has since lost a third of its value, sliding as low as $27.15, after plummeting by more than 8 percent on Monday. 

Shares of Zynga, a company whose games are prominently feature on Facebook, also dropped more than 5 percent on Tuesday, closing at a year-long low of $4.58.