I think Facebook's demise is closer than we believe, and that the main culprit will be Wall Street.
Given that the Street wants the stock price to always go up, future earnings has to go up. Hard to do with less user growth, because 1.5B already. More ads is hard if you want to keep the platform interesting. Still, room to grow in lesser FB-developed countries, with FB benefiting from economy growth and ad market growing there. But how much growth left in main earning market (US) without destroying the user experience?
With strong leadership, FB could say "to hell with higher and higher profits, I am happy to run a very profitable utility, not plastered with ads, a la Craiglist". But Zuckerberg seems all talk there. And he is trying to sell a lot of his stock. Yes, he's trying to retain control too, but that will be very hard (see current litigation on that). And employees don't like stocks that are not going up.
With less user and financial growth, less momentum, fewer interesting challenges, FB can slowly turn into Yahoo/AOL, and people may start saying bad things about the company (users + employees), creating a bad momentum. It would be hard to reverse, especially if FB is managed quarterly by earnings, as opposed to strong leadership.
Also, I get the feeling that FB got a small temporary break with Trump. A Hillary victory may have meant many very senior executives leaving to the new administration, possibly accelerating FB's loss of momentum.
Obviously, lots of talk here, many "ifs" and "maybe", and no hard data. That's why in the end I am not shorting the stock today. But wondering if I should.
Given that the Street wants the stock price to always go up, future earnings has to go up. Hard to do with less user growth, because 1.5B already. More ads is hard if you want to keep the platform interesting. Still, room to grow in lesser FB-developed countries, with FB benefiting from economy growth and ad market growing there. But how much growth left in main earning market (US) without destroying the user experience?
With strong leadership, FB could say "to hell with higher and higher profits, I am happy to run a very profitable utility, not plastered with ads, a la Craiglist". But Zuckerberg seems all talk there. And he is trying to sell a lot of his stock. Yes, he's trying to retain control too, but that will be very hard (see current litigation on that). And employees don't like stocks that are not going up.
With less user and financial growth, less momentum, fewer interesting challenges, FB can slowly turn into Yahoo/AOL, and people may start saying bad things about the company (users + employees), creating a bad momentum. It would be hard to reverse, especially if FB is managed quarterly by earnings, as opposed to strong leadership.
Also, I get the feeling that FB got a small temporary break with Trump. A Hillary victory may have meant many very senior executives leaving to the new administration, possibly accelerating FB's loss of momentum.
Obviously, lots of talk here, many "ifs" and "maybe", and no hard data. That's why in the end I am not shorting the stock today. But wondering if I should.