In the most recently reported period, the number of Facebook Inc. (NASDAQ: FB) shares sold short rose slightly. The modest increase was 632,000 for its Class A shares to 34.8 million. The reason may be that as the stock reached an all-time high recently and Wall Street wonders what could trigger another surge.

Facebook’s stock traded at $82.17 recently. That is up 40% in the past year, against a rise in the Nasdaq of 15% over the same period. Facebook’s market cap is $225 billion, against an annual revenue run rate of about $15 billion, based on its most recent quarterly earnings release. While the revenue for that quarter rose to $3.2 billion from $2.0 billion in the same quarter a year ago, net income was only $806 million. That is a slim margin for a large tech company, although management says it is investing in growth and not driving for profits.

With another set of earnings just a few weeks away, Facebook will have to clear three hurdles. The first is whether it can continue to expand its user base. The next is whether its revenue will continue to double. And the final hurdle is the extent to which people gravitate to other social networks.

A large expansion of Facebook’s member count may be hard to come by, based on its most recently quarterly results. Monthly active users as of the end of the quarter were 1.35 billion. The number was extraordinarily large, but only up 14% year over year. Facebook’s membership growth has slowed considerably.

According to Yahoo! Finance, Facebook’s revenue improvement in the current quarter may also slow. Consensus analyst estimates are that revenue will rise 46% to $3.8 billion.

Finally, there is the issue of competition. In a recent Pew study, “among online adults,” 67% use Facebook, while 18% use Twitter, 15% use Pinterest and 13% Instagram. Most evidence indicates that use of social networks other than Facebook is rising quickly.

Short sellers appear to be taking a wait and see approach to Facebook. Based on the evidence, they may have reason to.

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