The catastrophe better known as Facebook’s falling stock prices is a strong foreboding of the company’s relatively imminent exit from the internet’s grownup table, according to one analyst. Today, Ironfire Capital’s Eric Jackson told CNBC’s Squawk on the Street that Facebook will “disappear in the way the Yahoo has disappeared” within the next 5 to 8 years.
Jacksons big reason behind this projection? Facebook’s struggle to monetize their mobile app.
This idea isn’t new, and it isn’t disputed by Facebook. Prior to going public, Facebook amended its IPO filing to reflect these concerns:
We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users increasing more rapidly than the increase in the number of ads delivered. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.
Shortly after Facebook’s stock price began to tank, a class-action lawsuit was filed that accused the company of concealing “a severe and pronounced reduction” in revenue growth predictions dealing with mobile:
“Facebook was then experiencing a severe and pronounced reduction in revenue growth due to an increase of users of its Facebook app or website through mobile devices rather than a traditional PC such that the Company told the Underwriter Defendants to materially lower their revenue forecasts for 2012,” said the lawsuit.
It went on to accuse Facebook (and Morgan Stanley) of failure to disclose this information prior to the IPO.
So, with Facebook’s mobile quandary on his mind, Jackson goes on to explain that Facebook is in a generation of web companies focused on the social web. He says that the next generation of companies are ones focused predominantly on monetizing mobile – and that Facebook will have a hard time doing that.
“The world is moving faster, it’s getting more competitive, not less, and I think those who are dominant in their prior generation are really going to have a hard time moving into this newer generation,” he said. “Facebook can buy a bunch of mobile companies, but they are still a big, fat website and that’s different from a mobile app.”
Remember, Facebook currently has over 900 million users and is an undisputed heavyweight online. Could they lose their seat at the table within the next decade? Can you really imagine a world where Facebook isn’t a huge player? Despite the aforementioned challenges, it’s hard to imagine Facebook dropping that far in just five years. But who knows? The world of web companies is volatile and unpredictable and even a giant like Facebook isn’t immune to fluctuations, as we are all well aware.
Could Facebook “disappear” in the next few years? Let us know what you think in the comments.