After the biggest stock market sell-off in history, what's next for Facebook?

When Facebook posted its quarterly results on Wednesday, the stock market sell-off that followed was dramatic. By the time the market closed the next day, the company had lost $100 billion in shareholder value. It was the biggest sell-off in Wall Street history. 

A market meltdown like that inevitably left the company's investors wondering "What's next for Facebook?"

After all, it wasn't a set of ugly numbers that sent investors to the exit. The company still made gobs of money — more than $5 billion in profit, in fact. But the sell-off was sparked by fears that the endless growth may soon come to an end.

To Ramona Pringle, a CBC columnist and media professor at Ryerson University in Toronto, the company's main problem is the same one that has felled many of its technological ancestors — you're cool, until you're not. And to young people at least, the world's biggest social media company is decidedly not.

"Talk to anyone under 22," she says, "and they're not on Facebook."

To the younger generation, Facebook is reminiscent of that old joke about a high school party — it's all fun and games until somebody's mom shows up.

Whatever young users the service does have, Pringle says, they basically just use it to "check in with their mom and share photos with their mom."

And the generation that follows is even less likely to sign up in droves, she says.

For a company that sold investors on its prospects based on endless growth, that's a problem. Facebook use is still growing in Asia, Africa and the Middle East. But it's declining in Europe and basically flat in North America — by far the company's two most lucrative markets.

"At least when it comes to North America," Pringle says, "they kind of maxed out."

Scandal 'boomerang'  

Which is part of the reason why investor Ophir Gottlieb says this week's sell-off makes sense.

The president and CEO of Capital Market Laboratories says Facebook got punished in part because of lingering fears from the Cambridge Analytica scandal, which revealed Facebook allowed an outside consulting firm to collect personal data on millions of users and sell it off to try to influence elections in the U.K. and the U.S.

"This is really where Facebook's lack of transparency during the data scandal and the election scandal is now going to boomerang and hit them," Gottlieb says.

Despite the eye-popping profit figure of $5.1 billion, Gottlieb rattles off a series of metrics that show why the stock plunge was at least partly justified based on the numbers alone.

The company increased its headcount by almost 50 per cent as it went on a hiring spree to make good on its post-scandal promises to protect data privacy. But by its own admission, its revenue growth is slowing to about 25 per cent a year, which has pushed the company's profit margin to about half of what it used to be.

"Add up slower user growth, slowing revenue growth, and expenses growing faster than revenue for several years out," Gottlieb says, "and that's a recipe for about a 20 per cent stock drop."

'Elephant in the room'

Those might be fixable, short-term problems, but the company is still left with what he calls "the elephant in the room" —  people are just getting fed up with Facebook.

"We don't really know if the slowing user growth is because people are getting turned off," he says, "or if people are dropping accounts because they don't feel safe with their data."

Pringle says in the digital world, no company — not even Facebook — is "too big to fail." Its predecessors such as Myspace, AOL and others all had comparable reach to Facebook in their day.

But they all met their demise slowly, as rivals ate away at their dominance. As Gottlieb put it, "They tend to fall off because their network becomes less monopolistic over time."

That could happen to Facebook, too, but Gottlieb isn't ready to count the company out just yet.

"They don't necessarily have a plan they know will work," he says, "[but] it's not the end of the world for Facebook."