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User decline report causes Facebook stock slide

updated 08:14 pm EDT, Tue July 17, 2012

Growth little changed or down in 14 nations

Shares of Facebook fell slightly today as a report emerged suggesting that user engagement with the social network was leveling off or falling. Bloomberg reports that a report from Capstone Investments saw troubling growth numbers for the social network in 14 nations over the last quarter. Previous reports have claimed that user interest in the site was waning, though growth may still be strong in other areas.

Facebook stock dropped 0.6 percent today, closing at $28.09. Yesterday, shares in the company dropped 8.1 percent. Today's decline came on the news that the number of US-based Facebook users had dropped 1.1 percent over the last six months. Capstone's report also said that in 23 countries where Facebook had at least 50 percent market penetration, 14 of those countries had seen little or negative change over the past quarter.

The news could spell trouble for the world's largest social network, as it is approaching 50 percent penetration in most areas outside of Southeast Asia and Latin America. Capstone's report is in keeping with findings from a Reuters/Ipsos poll last month that a third of those surveyed were using the site less frequently than they had six months ago. More troubling for Facebook, though, could be that while the vast majority of its users still use the site, only a small fraction are ever interacting with the advertising that makes up for much of Facebook's revenues.

by MacNN Staff




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