logologologologo
  • Home
  • Business
  • Markets
  • Exchange
  • Investment
  • Personal Finance

The problem that might actually hurt Facebook

Without younger users, Facebook could be in big trouble

Former Facebook (FB) employee Frances Haugen fired up lawmakers, parents, and likely many others by leaking a trove of seemingly damning internal company documents to various media outlets.

But Facebook’s biggest existential threat doesn’t have anything to do with most of the revelations in those documents, such as the company’s inability to stop hate speech, violence, or even human trafficking on its website. You know, things that would likely sink any other company.

Instead, Facebook could finally be hurt because young people don’t like using Facebook — and the company appears to know that’s a sore spot.

“We are retooling our teams to make serving young adults their north star, rather than optimizing for the larger number of older people,” CEO Mark Zuckerberg said during the company’s Q3 earnings call.

According to documents Haugen took on her way out the door at Facebook, and leaked to a consortium of journalists, Facebook is hemorrhaging younger users, who are increasingly ignoring the platform for competing services.

The documents show, according to Bloomberg, that Facebook saw a 16% year-over-year decline in the time teens spent using the platform from 2020 to 2021. The amount of time young adults, those between 18 and 29 years old, were using the platform, meanwhile, fell 5%. On the flip side, people over 30 spent more time on Facebook in the same time period.

But Facebook covets younger users far more than older folks posting pictures of their grandkids. That’s partly because younger people are less likely set in their ways in terms of brand preferences, something advertisers look to exploit. What’s more, if Facebook snags people early, it has potential users for life.

“Once you start putting things onto one platform, and you maximize that amount of content on that platform, now moving to a different platform creates extremely high switching costs,” University of Chicago Booth School of Business Professor Pradeep Chintagunta told Yahoo Finance in a previous interview.

“All the birthdays that I keep track of are already on the platform. If I have to move to a different platform, then it’s going to be quite costly for me to recreate that entire experience.”

But to do that, Facebook has to find a way to make its main app attractive to younger users again.

Facebook is getting smoked by Snap, Instagram, and TikTok

Need proof that teens are ditching Facebook? Look no further than Piper Sandler’s Fall 2021 Taking Stock with Teens survey released in early October. The study, which included 10,000 U.S. teens across 44 states, found that 35% considered Snapchat (SNAP) their favorite social media platform, while 30% favored TikTok. Some 22% of teens liked Instagram most, though that number continues to fall.

Facebook? That was behind Discord and tied with Twitter as the least favorite social media networks among teens with just 2% of them liking the platforms. That’s not a good look.

So where teens do teens actually spend their time? According to the study, 81% of teens said they use Instagram monthly, while 77% of teens said they use Snapchat and 73% said they use TikTok. And while Instagram and Snapchat’s numbers have fallen from prior highs in previous surveys, TikTok’s use has gone up.

Facebook? Well, just 27% of teens say they use it monthly, down from 35% in the spring of 2020, and below both Twitter and Pinterest. Basically, teens aren’t down with Facebook. As one 11-year-old kid reportedly told the company’s own researchers, “Facebook is for old people.”

That said, they’re clearly fans of Instagram. So why does it matter that they’re not using Facebook itself? After all, it’s all the same company.

Because Facebook’s flagship app is its crown jewel and where most of its users are. In Q3, the company reported that the Facebook family of apps have 3.58 billion monthly active users. A massive number to be sure. But 2.91 billion users come directly from the main Facebook app.

In total, the Facebook app makes up more than 81% of the company’s monthly active user base. That’s a resource the social media giant can’t afford to see shrink. And if it can’t add new younger users, that’s what will eventually happen.

Zuckerberg’s ditching the olds

It’s not as though Facebook is unaware of these changes. In fact, Haugen claims that Facebook has misled investors about younger users, while focusing on its overall user growth among all ages. That’s why she turned the documents over to the Securities and Exchange Commission.

But even if the SEC finds that Facebook misled investors, it’s unlikely to take any serious action against Zuckerberg, like, say removing him from his post as chairman the way it did Tesla’s Elon Musk.

“It would be surprising if they did that,” explained Duke University Law School professor James Cox. After all, he said, members of Congress who count tech companies as their constituents would be up in arms over such a move.

Instead, Cox said, it’s more likely that the SEC would put a third-party monitor in place to ensure Facebook submits periodic reports about its user numbers.

In the meantime, Zuckerberg is fighting to ensure Facebook doesn’t become the next MySpace, which saw its own audience shrink around the time Facebook first launched.

“Historically, young adults have been a strong base and that’s important because they are the future,” Zuckerberg said during the company’s earnings call. “But over the last decade, as the audience that uses our apps has expanded so much and we’ve focused on serving everyone, our services have gotten dialed to be the best for the most people who use them rather than specifically for young adults.”

And that’s where the company’s retooling efforts around young users comes in. Don’t expect it to happen overnight, though.

“This shift will take years, not months, to fully execute, and I think it’s the right approach to building our community and company for the long term,” Zuckerberg acknowledged.

The Facebook CEO didn’t get into any specifics as to how the company will change its focus to younger users. But one hint may be Facebook’s efforts to build out a version of Instagram for kids.

The controversial platform, which the company put on hold after pushback from legislators, is designed to appeal to kids under 13. Facebook already has a version of its Messenger platform for kids, and if a version of Instagram is already underway, it’s possible the social media company will create a kid-focused version of the main Facebook app. Those kids, in turn, could become Facebook users as young adults.

If Facebook fails at luring in younger users, though, advertisers may finally start to take notice.

Related posts

December 27, 2022

Media stocks lost over $500 billion in value this year — here’s what happens next


Read more

Categories

  • Business
  • Content
  • Exchange
  • Inflation
  • Investment
  • Markets
  • Personal Finance
  • Technology
  • Uncategorized

Archives

  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021

Recent Posts

  • Where Will AMD Stock Be In 1 Year?
  • Here’s how — and where — Netflix has started cracking down on password sharing
  • 2 reasons Meta stock is exploding 20% after a whopper earnings miss
  • Apple earnings: What to expect from the iPhone maker
  • Bitcoin closes out best January since 2013

About Us

The Alpha Cut a Vida Street LLC Company
1404 N. Ronald Reagan Blvd.
Suite 1120
Longwood, FL 32750

Link

(843) 256-4375
https://thealphacut.com

Why Us

Terms & Privacy
Policy & Procedure
Disclaimer

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only.
Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
All data in this communication is provided for informational purposes only and is not intended for trading or investing purposes. We expressly disclaim the accuracy, adequacy, or completeness of any data and content provided by financial exchanges, individual issuers, their respective affiliates and business partners and shall not be liable for any errors, omissions or other defects in, delays or interruptions in such data, or for any actions taken in reliance thereon. You agree not to copy, modify, reformat, download, store, reproduce, reprocess, transmit or redistribute any data or information found herein or use any such data or information in a commercial enterprise without obtaining our prior written consent.
We make no express or implied warranties or representations and shall have no liability whatsoever with respect to any data contained herein. The data may not be further redistributed or used to create indices or other financial products. This report and the views expressed herein are subject to change at any time based upon market or other conditions (such as domestic and global economic trends) and are current as of the date of publication hereof. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.
We emphasize that Investment in the securities of smaller companies can involve greater risk than is generally associated with investment in larger, more established companies, and can result in significant capital losses that may have a detrimental effect on the value of your investments.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth.As with any structuring of a portfolio of investments, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
The information, analysis and opinions expressed herein are for general, impersonal information only and are not intended to provide specific advice or recommendations for any individual entity.

copyright © Alpha Cut 2021. All Right Reserved
The Alpha Cut a Vida Street LLC Company