Predicting Facebook will bring their IPO forward

On the news that usage is falling in the early markets.

Facebook is still growing towards 700 million users, having reached 687 million monthly actives by the start of June, according to our Inside Facebook Gold data service. Most of the new users continue to come from countries that are relatively late in adopting Facebook, as has been the trend for the past year. But overall growth has been lower than normal for the second month straight, which is unusual.

The company gained 11.8 million more people over May, following 13.9 million over April. In contrast, it grew by at least 20 million new users over the typical month in the past 12; while there have been a few months that have registered lower growth numbers, they have not been back to back.

Why the drop? Most prominently, the United States lost nearly 6 million users, falling from 155.2 million at the start of May to 149.4 million at the end of it. This is the first time the country has lost users in the past year. Canada also fell significantly, by 1.52 million down to 16.6 million, although it has been fluctuating around that number for the past year. Meanwhile, the United Kingdom, Norway and Russia all posted losses of more than 100,000. If these countries — most of whom had adopted Facebook many years ago — had not lost users, and instead posted even small gains, Facebook would have had a much more typical month.

We predicted this 3 years ago, using the social network dynamic explained in the post. The graph is reproduced above

The blue line represents the total number of users, the red line represents usage, each user is assumed to have a usage pattern that is high intially and then settles down to a lower frequency over time (second graph below). Bear in mind that it's the red graph that is the major predictor of Ad based revenues.



The result for Facebook is worrying as they move up to IPO, the last thing they can afford is widespread signs of this sort of collapse so we would not be surprised that, if this trend carries on, the IPO is pulled forward.