At a high level, the numbers and the guidance sure seem to point to “Peak Facebook”. User growth is slowing because Facebook is running out of people who aren’t yet on the network –
which is insane, but was always going to be true in the ultimate success state they’ve achieved. Meanwhile, those who aren’t yet on Facebook (and in many cases, aren’t yet on the internet in general), are unlikely to be nearly as profitable as the initial user bases have been. (The more profitable ones, like kids in the U.S., seem just as likely to be “Facebook Nevers”
.) At the same time, Facebook is altering the product to make it generate less money – which sounds magnanimous, but is actually just necessary
to keep people actually using the product and to stop fake news, etc. So it’s a perfect storm of factors that led to the Tower of Terror-style drop
in the stock price.
Facebook’s saving grace – soon, perhaps literally – remains Instagram
. And it’s no surprise that Mark Zuckerberg kicked off his comments talking about how great things were going over there. But the issue is still that the company doesn’t yet know if it can be as profitable as Facebook itself has been. And the answer is probably not
, because we’ve seemingly crossed a chasm in terms of ad load users are willing to put up with
. The feed was highly conducive to this, the Story format, less so. Still good, mind you. But not what Facebook has been used to.
So again, in a few ways it feels like we may have just seen Peak Facebook. I realize that’s dangerous to predict (and I do think the stock will bounce back, by the way). But as growth and monetization slow, Facebook has to start pouring more and more resources into what’s next. Instagram is the obvious answer, but again, only for so long. They need to figure out what’s next after what’s next.
Drinking: a Cold-Brew High Brew Salted Caramel Coffee. ☕️ I love these things (though I prefer more standard flavors), and it’s 9 in the morning on a Friday. So no 🍺… yet. Enjoy a sort of random smattering of links below. 🍻