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Facebook should disappear by 2020, says financial analyst

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Facebook's plummeting stock price is leading one fund manager to envisage the complete disappearance of the social network by 2020.

"In five to eight years, they will disappear just like Yahoo disappeared," says the founder of the firm IronFire Capital, Eric Jackson...during a show on CNBC.

An omen that is not innocent when you consider that Eric Jackson... had already said the same thing on Yahoo in 2007.. "Yahoo continues to make money, is profitable and still has 13,000 employees, but its value is only 10% of that recorded at its historic high in 2000".

So why does Jackson see the erosion of Facebook title by the end of the decade? According to him, the emergence of the mobile web and Facebook's difficulties in adapting to it could accelerate its downfall. In fact, last month, in the regulatory filings it submitted to the U.S. Securities and Exchange Commission prior to its IPO, Facebook acknowledged the mobile challenge by stating that the growing number of mobile users who were also facebook users was very difficult to monetize but "should not be allowed to negatively affect the Company's revenue and financial results.

Jackson adds: "There have been three generations of web companies. The first generation was large portals, such as Yahoo, where content was aggregated in one place. The second was the social web with Facebook and the third generation will be companies focused entirely on monetizing the mobile platform. Facebook is going to want to keep fighting... The world is changing faster, it's becoming more competitive, and I think the ones that were dominant in the previous generation are really going to have a hard time moving on to the next generation that's coming.

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Although Facebook still wants to embark on a vast acquisition offensive to arm itself more in the mobile domain (as with the purchase of Instagram, for example), Eric Jackson believes that the social network will have to meet many challenges to ensure its profitability via mobility, just as Google continues to struggle with great determination to establish itself in social networking, via Google+.

Even today, the Facebook stock is at a new low since its initial public offering, at 25.60 $US. 

To see Eric Jackson's interview on CNBC: http://video.cnbc.com/gallery/?video=3000093999

(Source : http://www.cnbc.com / June 4, 2012)

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