I didn’t join the crowd stampeding for F-Book stock recently. I wouldn’t likely have ventured my limited investment budget anyways, but I had a feeling The Book’s days in the starring role of social media are numbered. Here’s why:
1) While the user base continues to grow, it’s slowing all the time. Some kind of natural saturation point has been reached, or is close;
2) Revenue growth has steadily declined. In fact, post-IPO, Facebook is now burning cash, meaning it’s eating into its war chest just to stay afloat;
3) It’s steadily losing ground to Google’s display ad program;
4) Major advertisers are re-thinking the value of social media advertising campaigns, as evidenced by GM’s recent withdrawal from F-Book;
The latter entry might be the most salient. In the fashion/fad world, 8 years is an eternity. The juice of “new/hip/current/cutting edge” is now long past for blue-and-white. While there’s no obvious “replacement” in terms of a competitor (yet), the F-Book demographic is now broad enough to neutralize the ‘hip’ factor among the fashion-sensitive younger crowd.
In the same way that other tech advances end up seeming no more memorable than the furniture in our homes, F-Book seems to be settling into a groove as just another media channel.
Remember how ‘bulletproof’ Blackberry seemed just two years ago? It boasted serious tech credibility but, more importantly, it was hip as all get out. What did it lose in the meantime? Well, mostly that hipness. Apple’s phone offerings turned it into a fashion pretender. The iPad not only put it on the defensive, but turned it into a bit of a tech joke when the Playbook came out. There’s one thing that hipness cannot overcome: RIDICULE.
So far, people seem to be ignoring the reality that the absolutely essential growth numbers that Facebook has to generate over the long haul are just not there. Heaven forbid that Facebook’s hipness suffer a noticeable hit. They’ll be having a gigantic yard sale for their army of servers in short order.