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June 7, 2012

Analyst predicts Facebook will disappear in 5-8 years

As Facebook’s stock continues to spiral, now falling 27% since its public debut, some analysts predict that the social network could be no more in 5 years.

By Tineka Smith


It’s hard to believe that Facebook’s 900 million users could eventually abandon the site but Eric Jackson, the founder of Ironfire Capital, says it’s true.

According to Jackson, Facebook will have fallen by 2020. "In five to eight years they are going to disappear in the way that Yahoo disappeared," Jackson said on CNBC’s Squawk on the Street.

"Yahoo is still making money. It’s still profitable, still has 13,000 employees working for it," Jackson said. "But it’s 10% of the value that it was at the height of 2000. For all intents and purposes, it’s disappeared."

The analyst researched how different generations of web companies have developed over time.

The first generating consisted of giant web companies like Yahoo. Then the second generation of social web companies, like Facebook came along which caused Yahoo and affiliates to fade.

Jackson says the third generation now consists of businesses that focus on monetising the mobile platform, which is an area Facebook is having difficulty to grasp.

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"When you look over these three generations, no matter how successful you are in one generation, you don’t seem to be able to translate that into success in the second generation, no matter how much money you have in the bank, no matter how many smart PhDs you have working for you," Jackson explained. "Look at how Google has struggled moving into social, and I think Facebook is going to have the same kind of challenges moving into mobile."

As the world continues to become more competitive "those dominant in the previous generation are really going to have a hard time moving into this newer generation," says Jackson.

Facebook has attempted to strengthen its mobile platform since publically admitting its weakness in mobile to investors prior to its IPO.

The social network launched an App centre as well as acquiring Instagram for $1bn along with other mobile apps like Lightbox and Karma.

Yet, Jackson is adamant that the company will never succeed in mobile.

"Facebook can buy a bunch of mobile companies, but they are still a big, fat website and that’s different from a mobile app."

Please follow this author on Twitter @Tineka_S or comment below.

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