Twitter Inc. (TWTR) is not the only social media company that is struggling with user engagement. Facebook, Inc. (FB) is also worried that its users are posting fewer updates about what's going on in their daily lives for friends to see, like, share or comment.
An Original, Yet Ongoing Concern
Like Twitter, which has seen its user base plateau, causing its stock price to crater, Facebook is staring at a similar fate. Original posts are more than just a barometer of user engagement, they are Facebook’s bread-and-butter business and central to its News Feed, where users' posts appear. It's the lifeblood of the company, given that's where Facebook's ads are displayed.
According to reports, Facebook recently suffered a double-digit decline in “original posts.” These updates not only are a critical part of Facebook's advertising dominance, they are how Facebook collects personal information about its users and a primary source of determining targeted advertising. (See also: How Facebook, Twitter, Social Media Make Money From You.)
Personal posts were down 21% from mid-2014 to mid-2015, a report suggests. And the report, which cites four people with knowledge of the situation, says overall sharing of posts declined 5.5% during that same span.
A Bloomberg article Thursday said that Facebook CEO Mark Zuckerberg discussed with staff members during meetings this year about ways to get more Facebook users to share personal life events. Bloomberg noted that Facebook has come up with various ways to inspire more personal sharing, including an “On This Day” feature the company launched last year.
In a response to reports of declining original posts, Facebook said, “People continue to share a ton on Facebook; the overall level of sharing has remained not only strong, but similar to levels in prior years.” Meanwhile, the company has reportedly taken steps to address this issue, including forming a team in London to mitigate the decline and reverse the trend. (See also: WhatsApp: The Best Facebook Purchase Ever?)
The Bottom Line
Regarding Facebook's response to overall sharing, while the net total may remain strong and similar to prior-year levels, the response failed to specifically address the issue of "original posts." FB shares closed Friday at $110.63, down 2.65%, marking a decline of 4.6% from the previous week's close of $116.06. The shares have returned 5.7% so far in 2016, compared with a 0.18% rise in the S&P 500 (SPX) index. FB stock has a consensus buy rating and an average analyst 12-month price target of $130, suggesting 22% gains from Friday's close.