It seems that
) has still not lost its popularity among teenagers as supported by
the results of a survey recently conducted by
The research firm had surveyed about 4,517 U.S. teenagers regarding
their social media usage. Facebook emerged the winner with around
28.0% of the youth admitting to using its services all the time.
Instagram came second followed by Snapchat,
), Vine and Whatsapp.
Per the research report, an increase in smartphone usage in the
near future will lead to more teenagers using the social network,
since Facebook's mobile app happens to be one of the most popular
Lack of privacy has been blamed for teenage fatigue issues related
to Facebook. The company's CFO, David Ebersman publicly accepted
that young people were abandoning the social media platform. A Ivy
League report forecast that the services of Facebook would be
extinct by 2017. Even U.S. President Obama recently declared
that Facebook was no longer popular with the younger generation.
In an effort to win back teenagers, Facebook has lowered the age
restrictions, which prevented them from making their posts public.
Additionally, the company acquired short-messaging app, Whatsapp,
which is immensely popular among teenagers. Most recently, Facebook
launched Slingshot app, which strongly resembles Snapchat, another
popular app among teenagers.
We believe that these initiatives had a positive effect on
teenagers who were abandoning Facebook for other social apps and
the research report aptly reflects that. However, these surveys are
based on samples and hence cannot be deemed conclusive. Further, we
believe that the headwinds still persist, as the company's privacy
policy continues to remain under public scrutiny.
Nonetheless, improving teenage user base is a positive for Facebook
in the long run. We believe that the company's growing mobile user
base (more than 1 billion), Instagram's increasing popularity (200
million users) and the new initiatives such as Internet.org will
continue to boost share prices in 2014 and beyond.
However, as Facebook's ad business matures, top-line growth is
expected to suffer. Facebook's rapid pace of acquisitions is also
expected to weigh down on profitability and cash balance in the
near term. Intensifying competition from the likes of
) and Twitter remains a major concern.
Currently, Facebook has a Zacks Rank # 3 (Hold).
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