To Understand Facebook, Quit Facebook

The following video is part of our "Motley Fool Conversations" series, in which research analyst Catherine Baab-Muguira and industrials editor/analyst Isaac Pino discuss topics across the investing world.

A new Reuters poll reveals that four out of five Facebook users say the site has no influence on their purchasing decisions -- a disturbing fact, given that Facebook's current business model is almost entirely dependent on advertising. As if that weren't bad enough, the same poll shows a third of users reporting that they spend less time on the site than they did just six months ago, which doesn’t bode well for Facebook's attempts to monetize its user base in some other, yet-to-be-devised way. Analyst Cat Baab-Muguira relates her own experience in quitting Facebook, seconding the findings of the Reuters survey. Is Facebook's appeal (and potential) draining away?

Facebook recently became the largest company ever to IPO. Yet all the buzz around this social media monster could prove off-base, as Facebook has deep problems converting its millions of members to revenue. We've created a new report, "Forget Facebook -- Here's the Tech IPO You Should Be Buying," that details a much better social media stock that has a longer runway for growth than Facebook. The report won't be available forever, so click here to get access today -- it's totally free.

Catherine Baab-Muguira has no positions in the stocks mentioned above. Isaac Pino has no positions in the stocks mentioned above. The Motley Fool owns shares of, Facebook, and Google. Motley Fool newsletter services recommend, Google, and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On June 07, 2012, at 3:53 PM, tye45 wrote:

    Yeah, a lot of people quit Windows to go to Linux, but MS is still making money. The fact of the matter is that the social media site with the most members will be the social media site. Ego, FB.

    Besides, $1.5 million a day is nothing to sneeze at.

  • Report this Comment On June 07, 2012, at 4:23 PM, glynn1950 wrote:

    If you post this on your local news media that Facebook spy on!!!!

    :::Google " The Koch brothers Exposed" and see who the right wing republicans tea baggers and facebook take their orders from!!!!

    Facebook is now disabling peoples accounts (Censorship) that post anything against the Koch brothers, Roves’ PAC or the tea bag party on any website that they monitor!!!!

    You can not post on any of your local news sites when Facebook censors you!!!!!!

    Also is it true that facebook is selling personal information (passwords) to international corporations????

  • Report this Comment On June 08, 2012, at 9:39 AM, TMFCatB wrote:

    Hey, Tye45. Thanks for your comments, I see you on the comparison to Windows, but I think there's a key difference here, in that MS doesn't rely on an ad model. There was a joke about this on the humor site McSweeney's the other day (one which sums up for me Facebook's ad problem): "The way it works is, we give away the product for free, then lure advertisers with the promise of connecting them to millions of people who hate to pay for things."

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