Why Facebook stock will go down by 2013

Facebook has gotten off to a rocky start

Facebook stock has gotten off to a rocky start in 2012- but it could have gotten worse. Some people are still proclaiming a positive future for facebook stock and are saying that you should be in.

Others, such as myself, are taking a more careful approach and warning that it might not be a good long term investment.

There are only three options as to what can happen from here: Facebook stock will go up (meaning the faithful get rewarded in equity), the stock can stay the same, or the stock can go down (meaning the faithful will be pretty upset and the nay-sayers will be biting their tongues, trying not to say "I told you so".)

Why Facebook stock will go down by 2013

Here is why I believe Facebook stock will go down by about 2013: The MySpace Phase-out Populatity Effect.

The MySpace Phase-out Popularity Effect refers to what took place with Myspace over the 2006-2008 period.

Back in old days of 2006, MySpace was the King of social networking.

This may be hard to comprehend for more newcomers to the internet who wern't social networking at that time, but Facebook was considered the smaller, uncooler version of MySpace that no-one liked.

I still remember trying Facebook out and I actually enjoyed the features and enjoyed the layout, but noone else was using it! So back to MySpace it was...

MySpace really was the be all, end all of social networking. Everyone had MySpace. Every day was another flurry of comments on your profile and things to do.

But what happened?

Somehow, over time, the "coolness" of MySpace started to erode. It is inevitable. For a social network, it's simply something that reaches a peak and then begins a steady decline until... THE TIPPING POINT.

The Tipping Point

Eventually there came a time, "the tipping point", where Facebook was rising and MySpace was declining, and everyone simply jumped ship and joined FaceBook.

Facebook was "the new thing".

MySpace was "old", "tired" and "so lame".

If you love FaceBook, get used to those terms. I believe they are on their on way for Facebook.

Now lets get one thing straight... Facebook is no MySpace.

There are clear differences, and Facebook is far better established and commands a much wider audience then MySpace did- it appeals to people of all age groups where MySpace was more popular with younger people.

But the effect is the same, where as Facebook used to be the "cool" thing, it will soon be on the decline and when the public opinion turns against it, in combination with the rise of a "cool" new social network, Facebook will meet it's effect end.

The Verdict From the Target Audience

I spoke to my brother who is in the main target audience of Facebook and here is what he said.

"When I used to log on I would see like 100 people online... now there's never more then 30."

Verdict is in: Facebook is on the decline and as a result, the business will suffer and the stock price will drop over the course of the year.

How Facebook can save itself

There is still a way out for Facebook... Diversification.

If Facebook can spread it's brand out and go into good, profitable markets, it will of course be able to justify and maintain- if not grow, it's stock price.

But if Facebook remains their only major product.. I believe it will decline.

Come back in 2013 and we'll see if I was right or wrong!

More by this Author


Comments 7 comments

BraidedZero profile image

BraidedZero 4 years ago from Texas

The only way FB stock was a good investment was on the first day by day trading. On the first day it dropped to $38 quickly then it jumped back up to $42.50. In that span of 2 hours you gained $4.50 on your shares if you bought low and sold high (like me!). And if you'll remember Xanga was the first social media site. They were before Myspace but they started making people pay for memberships so Myspace took over. I remember signing up for a Facebook account in the beginning when you had to have a college email address to sign up. Ah, the good old days. To answer your section about "diversification" though, FB is currently working on a Facebook Phone. Though I don't see that panning out under their new lawsuits. They are definitely dive bombing into the ground. Sadly enough I think the only thing that will keep them together is the older generation. The kids will move to one of the other websites while the older generation, who only just got use to FB, will stay on it.


Rock_nj profile image

Rock_nj 4 years ago from New Jersey

I wouldn't count Facebook's stock FB out so early. With 900 Million users (even if only 500 Million are actual regular users) there's a lot of potential for Facebook to make money off them. I know many people that are on Facebook all the time; too much time in my opinion. There are a lot of untapped revenue streams that Facebook is just starting to explore. One for example, is having an add each time you log in or out of Facebook, which I am starting to see. Then there's the all important mobile Facebook users that Mark Z just said they are working overtime to figure out how to monetize. Keep in mind that all of those "likes" that Facebook users do are a gold mine for advertisers.

With the northern hemisphere winter approaching, we'll find out how well Facebook does in the cold and dark months, when a lot more people are online and using sites like Facebook.


aususaeast profile image

aususaeast 3 years ago from Aus Author

As 2013 approaches FB is rallying and approaching $30! Perhaps my predictions in this article will be off!


BraidedZero profile image

BraidedZero 3 years ago from Texas

They'll drop back down. Just give it time.


Robert W Wilson profile image

Robert W Wilson 3 years ago from Maricopa, AZ

Remember stock price is based on perception first, reality second.


Rock_nj profile image

Rock_nj 3 years ago from New Jersey

Perhaps your timeframe for calling for a decline in Facebook's stock price was just too short (although the performance of FB in 2013 has been anything but stellar)? I am feeling Facebook fatigue myself and not spending as much time on it nowadays. It just gets old after a while and gets in the way of important things. One of my regular friends who spent a lot of time on Facebook just deleted his account.

The MySpace Phase-out Popularity Effect may eventually happen to Facebook, but it has to reach its peak and really start losing users for it to really hurt the company and the price of its stock FB. If 3 or 4 good friends of mine left Facebook, I wouldn't have much reason to stick around beyond getting news fed to me on things I "like". But keep in mind that Facebook has deep pockets and will be able to weather any problems for a long time before its stock FB really gets into trouble. Also, they seem to be pushing the advertising angle with advertising disguised as posts. That seems to be causing some to like Facebook less, but is pulling in needed money for the company.


aususaeast profile image

aususaeast 3 years ago from Aus Author

So I wrote this article about a year and a half ago and it looks like I was wrong!

It's September 2013 and Facebook stock sits at over $45.80!

Although Facebook seems less popular amount the people I know, it seems to have avoided the fate of Myspace for now as a lot of people are still using Facebook.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working