Talking Numbers

Here's why Facebook's 'disease' could be good for the stock

Here's why Facebook's 'disease' could be good for the stock

Will Facebook lose 80% of its users?

That's what one Princeton study predicts. Using an infectious disease model, researchers at the university's Department of Mechanical and Aerospace Engineering expect that "Facebook will undergo a rapid decline in the coming years, losing 80% of its peak user base between 2015 and 2017."

(The full paper – which has yet to be peer-reviewed – can be found here in .pdf form)

While he doesn't believe it will reach that magnitude any time soon, Steve Cortes, founder of Veracruz TJM, believes Facebook is at risk.

"I think 80% is extreme," says Cortes. "I do think they have a point here, which is activity begets activity. That's the virtuous side of the cycle when it comes to social media. If your friends are on, you're more likely to be on and so on. But, that process can also work in the reverse and that's what they say happens to many social media sites."

(Watch: Death of Facebook, or not?)

Cortes cites MySpace as an example of what can happen when there's drop-off in with a social network. Facebook is losing its cool factor with its younger users, according to Cortes.

"The lack of activity in that social space can feed onto itself and into a vicious cycle downward," says Cortes, who notes that Facebook has nonetheless hit its all-time highs. "I think there are serious reasons fundamentally to be suspicious about the future of Facebook."

Ryan Detrick, Schaeffer's Investment Research Senior Technical Strategist, is optimistic about Facebook's prospects from both the technical and contrarian points of view.

"You look at the chart and it's consolidating above the highs of last October," says Detrick. "But, also it's forming an ascending triangle. The $59 level has been resistance."

(See: CNBC's Technology coverage)

The ascending triangle is roughly $14 high on the chart, notes Detrick. According to technical analysis, the stock could add an additional $14 – bringing the stock up to $73 – should it break above the resistance line.

As well, Detrick likes hearing warnings about Facebook's future, including this most recent paper by Princeton researchers.

"Just last week, they said teens are no longer using Facebook at all like they were," says Detrick. "From a contrarian point of view, I think [it's] bullish and maybe can push it higher once we get into earnings season here soon."

To see more of the analysis on Facebook from Cortes on the fundamentals and Detrick on the technicals, watch the video above.

More from Talking Numbers:

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Why we could see a market correction in February

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