IB Net Payout Yields Model

More Details On Teens Abandoning Facebook

Right Mix Marketing provided the below infographic that highlights the move of teens to new social networks. The damaging part to the Facebook valuation is the concept that parents have joined the social network in order to track teens. In essence, not only does this push the teens to another service, but it also suggests the parents aren't solid users either.

This news fits our thesis that Facebook will have a very difficult time justifying the $61B valuation. Clearly it is a valuable social network that will maintain millions if not billions of users for a long time. The company can grow revenue while losing North American users as it becomes more efficient. The problem over the next few years is that the domestic user base could be much smaller and those are the users that are worth the most.

In our opinion, it doesn't justify the current $61B valuation. Even at $20B, Facebook would be one of the largest companies in the world and trade at 3x revenue.

Disclosure: Short FB. Please review the disclaimer page for more details. 


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