Boston, MA 01/23/2014 (wallstreetpr) – Facebook Inc (NASDAQ:FB) was widely lacking on the positive side of things on Wednesday whereby the company lost more than 1.7 percent of its share value in regular trading session and another 0.05 percent in the after hour. With about 2.4 billion shares outstanding, the stock possibly wiped about $2.4 billion from its market cap.
This downfall of the stock followed a research report by Princeton University which said that Facebook would lose about 80 percent of its user-base in the next three years. While this opinion sounds far-fetched, it is possible it played a role in trimming the value of the stock.
Facebook is yet to talk about what it thinks about the report. Nonetheless, analysts are already weighing in with views which seem to support the contrary.
While the researchers used a disease spread model to study Facebook, saying that the model rightly captured the downfall of Myspace, it fails to offer a realistic picture that anyone can believe. For example, it doesn’t seem possible that Facebook, currently with about 1.2 billion users, would loss 80 percent of its population by 2017.
Put another way, it doesn’t seem real that Facebook Inc (NASDAQ:FB) can loss more than 317 million people from its network annually through the next three years. Also, to compare Facebook with MySpace is to miss the point by a big margin taking into account the fact that at its peak MySpace had about 75 million active monthly users when the Menlo Park social network giant said last September that it had 1.2 billion users.
Declining population
There is no doubt that Facebook Inc (NASDAQ:FB) is losing users in other segments, especially among teens, but also, the company has continued to grow its monthly user-base, perhaps more than what it is losing. In any case, the said loss of users seems to ignore that some of the teenagers leaving Facebook end up in its photo-sharing app Instagram.
Investor takeaway
There is no reason to panic. Facebook Inc (NASDAQ:FB) is actually getting better each day than its rivals if you take into account how the company is improving the platform of late. Instead of it losing users, Facebook is going to add more.
