Is Facebook Inc (FB) Doomed To A MySpace-Esque Fate?


Facebook Inc (NASDAQ:FB) stands at a market capitalization of $142 billion just 10 years after its launch under the stewardship of Mark Zuckerberg. However, the success so far is in no way a guarantee of a secured future; MySpace is a good example of that.

Is Facebook Inc (FB) Doomed To A MySpace-Esque Fate?

Facebook different from MySpace

Before the advent of Facebook Inc (NASDAQ:FB), MySpace was the most dominant social network company. It was very popular and enjoyed s wide user base. At that time, no one could imagine that Facebook could trample MySpace.

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Apart from the innovation of Facebook, MySpace also made its share of mistakes as it lagged behind in allowing third party app developers to contribute. The social networking site was a subsidiary of News Corp and thus faced the bureaucracy. Also, there was a lack of technical talent in the firm, says a report from Business Insider by Tom Taulli.

Zuckerberg, on the other hand, adopted an altogether different approach by allowing companies like Zynga Inc (NASDAQ:ZNGA) to develop games for Facebook, which was equally beneficial for Zynga, as well. Mark Zuckerberg also hunted for talent and brought some of the best technical talents to Facebook. He adopted the strategy of acquihires, which implies buying small companies to utilize their pool of talent and resources.

Such strategies allowed Zuckerberg to stretch his user base. Thus, the scenario for powerful Facebook ads system was developed that provided upside to the U.S. based firm’s stock.

Need to update constantly

However, even after tireless efforts of the CEO the stock is still under pressure to post better than ever results every quarter. It can be inferred that Zuckerberg has become obsessed with monetization.

Recently, CFO David Ebersman said that Facebook Inc (NASDAQ:FB) has placed enough ads on its website and is reaching the limit. The CFO also hinted that Facebook is losing traction amongst teenagers, which made the stock to drop.

Instead of Facebook Inc (NASDAQ:FB), users gravitating towards apps such as SnapChat, Whatsapp, Pinterest and Line. Mark Zuckerberg even tried to buy SnapChat by offering $3 billion, but the deal failed.

Facebook has not created any breakthrough app lately. Apps like Poke, Graph Search and Home For Android could not impress the users. However, the largest social networking site is still enjoying the confidence of the Wall Street, but if the users keep on losing interest in Facebook Inc (NASDAQ:FB), then it would soon be reflected in the stock.

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