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Wednesday, 18 July 2012 08:31

Facebook shares under pressure over growth concerns

Written by Peter Scott



These are the days it never rains but it pours, ee do ba be


Once again Facebook shares are doing what they do best, going down. Facebook dropped to $28.09 on Tuesday, bringing to week’s total decline to 8.6 percent, Bloomberg is reporting.

The new decline was brought about by Facebook’s upcoming earnings report, which is expected to paint a pretty bleak picture and indicate that growth slowed down in Q2. As the fad wears off, the number of Facebook users in the first world drops, which is nothing new.

The trouble for Facebook is that it will not be easy to cash in on users in underdeveloped parts of the world, as they are not a prime target for advertising. Another concern is Facebook’s apparent inability to cash in on mobile users. As a result, Facebook’s revenue growth slowed down over the past few quarters. In Q4 2011 revenue grew by 55 percent, but already in Q1 growth slowed down to 45 percent. These are still impressive figures, but the trend is worrying.

Another source of potential trouble for Facebook is Google+. Although many were quick to write off Google+ as a real competitor, the service is slowly gaining traction and in some respects it has a lot more potential than Facebook, thanks in large part to integration with other Google services and the Android platform.

More here.



Peter Scott

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