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Are The Big Social Networks Saturated?

Social networks are still growing, but only slightly. And they're more profitable than ever.

Posted on February 5, 2014, at 5:31 p.m. ET

Twitter revealed its first earnings report today announcing, among other things, that the social network now has 241 million average monthly active users, up just 9 million from last quarter.

Via Twitter

The numbers show Twitter is growing, but slowly compared to some of its younger, more nimble competitors. For example, the mobile messaging startup WhatsApp added 30 million users just last month.

The same can be said of Facebook, which has seen a steady leveling-off of monthly active user growth for some time now, albeit at a much larger scale.

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This has been a problem for other legacy social networks as well. LinkedIn reported an 8% quarter-over-quarter growth in membership, which is down from its 9% quarter-to-quarter membership growth average from the previous 10 quarters, a sign that things are slowing down a little. And Tumblr, which refuses to disclose monthly active users, has been plagued with rumors and indirect evidence that growth is slowing, mostly via traffic comparisons.

b-i.forbesimg.com / Via Forbes

Interestingly enough, both Facebook and Twitter's slow growth coincide with record revenues. Twitter posted a slight but unexpected profit of two cents a share, marking the first profitable quarter in the company's history.

Via Twitter
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Meanwhile Facebook handily beat earnings expectations last week with revenue up roughly 75% year-over-year for the fourth quarter.

files.shareholder.com / Via Facebook

To read the charts, it appears legacy social networks have never expanded at lower rates or been more profitable, which suggests that perhaps we're approaching a saturation point for the megaplatforms. It's intuitive that any social network has a maximum size, and slowing growth may be a sign that it's near (in Twitter's case slow growth could also be due to confusions about the service and the complicated "onboarding" process).

However, anything but explosive growth is a new trend among this elite group. And while a fuller picture will emerge over the next few quarters, perhaps the only certainty is that while the older players are showing some signs of slowing, the rest of the internet will continue to grow around it.

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