Relax. Teens Aren’t Fleeing Facebook

If Facebook (NASDAQ: FB) investors had a dollar for every time the media claimed teenagers were rapidly abandoning the site, they’d be rich by now. If they would have used the money to buy Facebook’s stock, they’d be even richer, considering the stock is sitting near all-time highs, and more than 400% higher than its IPO five years ago.

The latest impetus for the evergreen headline is Pew Research Center’s Teens, Social Media, and Technology survey. While the headline numbers look foreboding, long-term investors should take the survey and the cacophony of negative headlines with a grain of salt.

Image source: Getty Images.

Facebook isn’t simply Facebook

Pew finds that the percentage of U.S. teenagers (aged 13-17) using Facebook is down a whopping 20 percentage points in just a few years, dropping from 71% in 2015 to 51% currently. Admittedly, this isn’t great news for Facebook’s eponymous site. However, most investors understand that Facebook is more than just Facebook. Its become a social media powerhouse via acquisitions.

The 2011 acquisition of group messaging app Beluga essentially became Facebook Messenger, increasing the service’s utility and allowing it to grow to more than 1.3 billion users. In 2014 the company paid $19 million for Wi-Fi-texting service WhatsApp; at 1.5 billion users, WhatsApp is Facebook’s second-largest app.

However, perhaps the shrewdest decision was the company’s acquisition of Instagram. At the time, the $1 billion acquisition price tag was widely criticized, and Facebook’s stock fell to its all-time low shortly after the deal’s closing. Now it’s considered prescient, with the service on track to gross $10 billion in revenue annually by 2019.

2015 Teens Who Use Teens Who Use It Most Often 2018 Teens Who Use Teens Who Use It Most Often
Facebook 72% 41% YouTube 85% 32%
Instagram 52% 20% Instagram 72% 15%
Snapchat 41% 11% Snapchat 69% 35%
Twitter 33% 6% Facebook 51% 10%
Google+ 33% 5% Twitter 32% 3%
Vine 24% 31% Tumblr 9% 1%
Tumblr 14% 1% Reddit 7% 1%
Other 11% 0% None of the above 3% 3%

Table by author. Data source: Pew Research Center. Italicized names are Facebook properties.

The Pew data above show teens are flocking to Instagram in a major way, coming second to only Alphabet‘s YouTube and matching Facebook’s popularity in 2015.

YouTube’s inclusion skewed things

Furthermore, the precipitous drop in the “Use Most Often” question is also better than advertised. In 2015, 41% of teens reported using Facebook most of all; this year the figure dropped substantially to 10%.

Facebook’s decrease is most likely influenced by Pew’s including YouTube in the survey this year while not doing so in 2015.

Including YouTube in this round of polling makes comparisons to previous years meaningless. Additionally, I find YouTube’s inclusion in this list specious as it’s not generally considered social media.

Teens are likely using Facebook less, but it doesn’t matter

While teens are most likely using Facebook (the site) less, it’s likely not to the level the media purports. Facebook is still growing daily active users and monthly active users on a yearly and quarterly basis in the United States and Canada, which would be hard if U.S. teens were abandoning it en masse.

What you’re likely seeing is a natural progression from early adopter to the masses turning off early adopters — a virtual party ending when mom and grandma show up. As such, you may see teens checking in for shorter periods but still daily.

From a revenue perspective, however, this doesn’t matter. Facebook has continued to increase revenue substantially via a combination of increased ad load and more effective ads that brands are willing to pay a premium for. And remember, the kids may be headed to Instagram, but that still rewards Facebook investors.

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