Ironfire Capital Analyst: Facebook Will Disappear in 5 to 8 Years

Monday, 04 Jun 2012 01:42 PM

By Anthony Sokol

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In less than 10 years, Facebook will lose its dominance as a major web company, Eric Jackson, founder of Ironfire Capital, told CNBC's "Squawk on the Street."

"In five to eight years, they are going to disappear in the way that Yahoo has disappeared. Yahoo is still making money, it's still profitable, still has 13,000 employees working for it, but it's 10 percent of the value that it was at the height of 2000. For all intents and purposes, it's disappeared,” Jackson said.

Jackson explained that there have been three generations of web companies.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The first was big web portals where content was aggregated in one place, like Yahoo. The second generation was the social web with such sites as Facebook. The third generation comprises companies that are focused entirely on monetizing the mobile platform. Facebook’s advertising gains aren’t keeping up with growth in its user base because more members access the social-networking site through handheld devices, according to Bloomberg.

Facebook acknowledged its mobile challenge in a regulatory filing last month, admitting that the growing number of mobile users using Facebook is difficult to monetize.

Facebook's stock dropped about 27 percent from its IPO price of $38 a share, which was the biggest two-week loss of any IPO since 1995.

Bloomberg reported that Facebook stock dropped to a record intraday low after Sanford C. Bernstein & Co. initiated coverage with an underperform rating and a $25 target price.

The company recently introduced an advertising service for mobile users, but it hasn’t generated meaningful revenue.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.



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