Facebook User Base Declines, Share Prices Take A Hit

Facebook shares took a hit on Tuesday after a report emerged which suggests that Facebook user engagement has leveled off and may even be declining.

The report from Capstone Investments revealed troubling growth numbers in 14 countries over the last quarter, matching previous reports which suggest that user interest is beginning to falter. Several reports suggest that other areas of the social network are growing during a period of slowing user growth.

Following the report Facebook shares fell by 0.6 percent, closing at $28.09. Share prices fell for a second day after an 8.1 percent decrease on Monday.

Tuesday’s report found that Facebook users had fallen by 1.1 percent over the last six months. Capstone noted that in 23 countries where Facebook has at least 50 percent market penetration, 14 of those countries had seen “little or negative growth.”

Many investors were worried about the company’s growth potential once it reached 50 percent penetration and that level has been reached in most countries outside of Southeast Asia and Latin America.

Capstone’s report isn’t the first to offer a bleak outlook for future Facebook growth, in June a Reuters/Ipsos poll also found that one-third of Facebook users surveyed claimed to be using the social network less over the last six months.

The biggest concern for Facebook investors is not a slowdown in growth but rather the fact that less users are interacting with the websites advertisements. As Facebook users have becoming increasingly frustrated with Facebook’s mobile apps the company has been unable to capitalize on revenue for its ever-growing user base.