Facebook admits teens losing interest
UPDATE: 11:20 a.m. Saturday
Nicole Uvieghara is only 18, but that’s old enough to remember the good old days on Facebook.
“I used to log in to Facebook every day,” said Uvieghara, a Murrieta, California, native and freshman at Arizona State University. “Now, I go, like, once a week. On my news feed, I rarely see posts from my friends and I have not posted things on my wall in the past year.”
Her experience isn’t unusual. Teens are cooling on Facebook, a trend suggested by recent research and acknowledged, this week by Facebook itself. The shift was confirmed time and time again in e-mail and phone interviews with dozens of teens and their parents in CNN’s reporting of this story.
While the social-networking juggernaut continues to chug along among adults, boasting more than 1 billion active users, younger users are flocking to newer, and arguably hipper, networking tools.
Sherman Watson of San Francisco said he’s noticed a dip in Facebook use by both his 18-year-old son and the younger employees at the retail store he manages.
“I think his generation, and definitely the younger ones, view Facebook as boorish and — let’s face it — something that their parents use,” Watson wrote in response to a Facebook post seeking thoughts on the issue. “Funny how history repeats itself in this regard.”
Instead, he said, mobile apps like Facebook-owned Instagram, and Vine, Twitter’s video tool, are where teens increasingly go to share.
For the first time this week, Facebook confirmed the trend is real.
“We did see a decrease in (teenage) daily users, especially younger teens,” Facebook Chief Financial Officer David Ebersman said Wednesday during a quarterly earnings call.
It was just months ago that Ebersman called the decline of teens using Facebook an “urban legend,” saying they were active on more sites, but not cutting back on their Facebook visits. CEO Mark Zuckerberg added that it “just isn’t true” that Facebook has a teen problem.
But even then, there were signs of a slide.
Facebook shares soared 15% Wednesday on blowout quarterly results, but stock lost steam after the company admitted young teens are losing interest in the site.
“We did see a decrease in [teenage] daily users [during the quarter], especially younger teens,” Facebook chief financial officer David Ebersman said Wednesday, during the company’s third-quarter earnings conference call with analysts. He said Facebook usage among overall U.S. teens was “stable,” however.
Previously, Facebook had defended itself against multiple recent studies and articles proposing that teens don’t find Facebook cool anymore. Last quarter, CEO Mark Zuckerberg said it “just isn’t true” that the company has a problem with the teen market.
Ebersman’s admission — coupled with other bits from Wednesday’s call, including the fact that Facebook isn’t planning to ramp up the number of ads in users’ feeds — sent Facebook shares slightly lower in after-hours trading.
That was a big disappointment given that Facebook shares had been up as much as 15% earlier in the evening, after blowing away Wall Street’s sales and profit expectations for the third quarter.
Facebook’s sales jumped 60% over the year to more than $2 billion. Excluding one-time charges, Facebook earned $621 million — double the company’s profit during the same quarter last year.
Strong mobile results: Perhaps even more pleasing to investors was that Facebook’s mobile business in particular came in very strong. Mobile ads now account for 49% of all Facebook ad revenue, up from 41% last quarter and easily beating analysts’ expectations.
That’s impressively rapid growth, considering that Facebook began serving mobile ads just last summer.
Before Facebook launched those ads, the company’s lack of mobile monetization had been a particular sticking point for investors. Shortly after the company filed for an initial public offering last May, Facebook disclosed that it wasn’t making “any meaningful revenue” from its growing pool of mobile users. That kept the stock in the doldrums until the company finally launched mobile ads in August 2012.
Now, Facebook stock is up 123% over the past year.
Ad revenue brought Facebook $1.8 billion in sales for the quarter — and the average price per ad rose 42% from last year.
The remaining $218 million of Facebook’s total sales came from fees that the company collects, including the cut off the top it takes from in-app payments.
Facebook now has 1.2 billion monthly active users overall, and 874 million mobile monthly active users.
On the negative side, Facebook’s expenses of $1.3 billion rose 45% over the year. The company attributed the jump to hiring more people and to increased infrastructure costs.
Facebook also said it had $9.3 billion in cash on hand at the end of the quarter.
Meanwhile Facebook has also been working to monetize Instagram, the photo-sharing app it purchased last year. Earlier this month, Instagram announced that it will begin placing ads in some U.S. users’ feeds over the next few months.