Social networking is rife with examples of companies that rose and fell.



Q: Could another social-networking company eat Facebook's lunch and kill the stock?

A:Social networking is rife with examples of companies that rose and fell.

The tired example of a social-networking company that went from hot to not is Myspace. The site rose up around the same time as Facebook, but it couldn't keep up with Facebook's growth and has ultimately lost stature.

But investors with longer memories can recall that social networking has been a buzzword on Wall Street for many years. Long before Myspace was, an online place for users to chat with each other and compare their interests. went public in 1998, and the initial public offering soared 606% on the first day of trading, which still ranks as the second-best first-day pop in history, says Jay Ritter of the University of Florida. Since then, the stock collapsed, was delisted and in 2008, the company was disbanded.

So, to answer your question, yes, social media is infamously faddish as users can easily migrate from one site to another with very little friction. That's not to say the same thing will happen to Facebook, but if history is a guide, it could. It just depends if another company comes up with an online social-media offering that users think is worth switching for.

It's critical for investors to monitor usage patterns and trends at Facebook. If there is an erosion of the number of people using Facebook or the hours they spend on the system, that will show up and could be an early sign that users are moving elsewhere.