Facebook Inc (FB): In The End

Social network competitors

That’s probably what could eventually cause Facebook’s decline: oversaturation. Teenagers, the early adopters of technology, are getting fed up with Facebook. And there are choices as the social media market becomes more mature and fragmented. Twitter is an alternative. LinkedIn Corp (NYSE:LNKD) just acquired Pulse in order to become more of a portal for news and stories for professionals. That’s a stark difference from what you see in a Facebook news feed.

So, what should an intrepid investor do when thinking about putting money in the social media space? Invest in LinkedIn Corp (NYSE:LNKD). Over the past year, the company’s revenue has risen 81%, and it only has 90 million users. As it continues to attract users, it will continue to grow. The only problem is that the stock price is already quite high.

But, LinkedIn Corp (NYSE:LNKD) is a better investment than Facebook. Staying away from Facebook as an investment would be a smart move. Until the company can easily explain its business model to investors, it’s not a good bet. While the company’s revenue increased at the end of the year, income was flat. That suggests growing pains and no real definitive understanding about how Facebook will make money on users in the long-term.

In the end

Facebook will announce its earnings from the first quarter of 2013 on May 1. It will be interesting to see how Facebook Home is performing. Hopefully, the company will also discuss what it thinks will help it continue to grow its business over time.

The article Facebook’s Fading Fortunes originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.