Why You Should Buy Facebook While It's In Crisis (archive)
In spite of the headlines, the hearings, and the hashtags, it does not look like many users are leaving Facebook. A survey conducted by Deutsche Bank concluded that "just 1% of respondents were deactivating or deleting their accounts." If the survey is representative of Facebook's 2 billion users, then 20 million users might leave. This may seem like a big loss, but it means 99% of users are staying.
Doug Clinton, the managing partner of Loup Ventures, estimates that each active user generates about $21 in profits for Facebook each year. The loss of 20 million users would therefore reduce Facebook's earnings by roughly $420 million. Facebook's pretax income last year was $20.5 billion. Does a 2% drop in pretax income justify a 9% loss of market value? I don't think so.
(Score: 3, Interesting) by jcross on Monday April 16 2018, @12:14PM
Also, even live human users can spend variable amounts of time on the site. This guy is acting like someone has to deactivate their account to reduce Facebook's profit, but I assume a user is going to bring in little to nothing if they never show up on the site. Maybe a lot of people are just deciding to use Facebook less or not at all for a while, then later they'll go to the bother of deleting their account, but maybe they'll just forget to. Meanwhile I've heard that more and more of the content is promotional and less and less of it is personal. The market may be pricing in the risk that the whole thing will implode and turn into a sausage party for advertisers.