Facebook’s stock price has had a near-perfect correlation with its Monthly Active Users (MAU) since IPO. This is in accordance with Metcalfe’s Law, which states that a network’s value is proportional to the number of users. Metcalfe’s Law has been used to value telecom, Bitcoin, and social media networks. Despite the recent negative publicity from the leaking of user data, Facebook’s MAUs has never been higher.
MAUs seem to correlate with Free Cash Flow as well:
This is one of the reasons why we think Facebook will make a full recovery from its recent woes. In fact, the chart below shows that even in the highly unlikely scenario of 50% of people in the US and Canada deleting Facebook in response to the data leaks, MAU would still be equivalent to levels in Q2 of last year. This is due to strong growth in Facebook usage among Asia and the rest of the world, which make up the vast majority of Facebook’s users.