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Tags: Social | Networking | Economy | facebook

Study: Social Networking Sites Could Add $1.3 Trillion to Economy

Friday, 27 July 2012 07:26 AM EDT

Social networking sites like Facebook and LinkedIn could add $900 billion to $1.3 trillion in value to the economy by improving the flow of information and collaboration, a McKinsey Global Institute study found, according to The New York Times.

Social networks allow for improved productivity, better consumer focus and enhanced teamwork.

"The industries with the highest percentage of interactions workers have the highest spread of profits per employee,” said Michael Chui, one of the report's authors, The Times added.

“It’s low in mining, but can vary by nine times in banking. If you can make these people more effective, you can make the biggest difference.”

Still, such numbers are a long way away, as many businesses still run hierarchical cultures that slow the spread of information from top to bottom as policy.

"These technologies are successful when influential people are role models, using them and explaining them,” Chui said.

Social networking icon Facebook went public in May though its shares dropped just afterwards on concerns the company was overvalued and secondly, despite having 900 million users, monetizing that base will be difficult.

One analyst who slapped a sell recommendation on Facebook early on said the time has come to buy.

The company recently traded at $23 a share, well beneath the $38-per share value set before going public.

Zynga, which makes games used on Facebook and accounts for about 18 percent of Facebook's revenue, missed earnings estimates, spooking investors into fearing Facebook faces a rough road ahead, but Facebook shares have fallen to the point that whatever happens with Zynga, the social networking site is due for a rebound, according to Pivotal Research Group analyst Brian Wieser.

"Decelerating growth at Zynga is not directly concerning to us," Pivotal Research Group analyst Brian Wieser wrote in a research note to clients, according to CNNMoney.

"Our model for Facebook already accounted for decelerating payments growth."

Wieser recently assigned a buy recommendation on Facebook.

© 2023 Newsmax Finance. All rights reserved.

Friday, 27 July 2012 07:26 AM
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